FIFO Method, Two-Department Analysis
Muskoge Company uses a process-costing system. The company manufactures a product that is processed in two departments: Molding and Assembly. In the Molding Department, direct materials are added at the beginning of the process; in the Assembly Department, additional direct materials are added at the end of the process. In both departments, conversion costs are incurred uniformly throughout the process. As work is completed, it is transferred out. The following table summarizes the production activity and costs for February:
| | | Molding | | Assembly |
| Beginning inventories: | | | | |
| Physical units | | 10,000 | | 8,000 |
| Costs: | | | | |
| Transferred in | | | | $45,300 |
| Direct materials | | $22,000 | | |
| Conversion costs | | $13,800 | | $16,900 |
| Current production: | | | | |
| Units started | | 25,000 | | ? |
| Units transferred out | | 30,000 | | 35,000 |
| Costs: | | | | |
| Transferred in | | | | ? |
| Direct materials | | $56,250 | | $40,250 |
| Conversion costs | | $103,500 | | $143,000 |
| Percentage of completion: | | | | |
| Beginning inventory | | 40% | | 50% |
| Ending inventory | | 80 | | 50 |
Required:
1. Using the FIFO method, prepare the following for the Molding Department:
a. A physical flow schedule
Muskoge Company Molding Department Physical Flow Schedule Units to account for: Units, beginning work in process 10,000 25,000 35,000 Units started in February (transferred in) Total units to account for Units accounted for: Units completed and transferred out: Started and completed From beginning work in process Units, ending work in process 20,000 10,000 5,000 Total units accounted for 35,000 Feedback b. An equivalent units calculation Direct Materials Total Equivalent Units 25,000 30,000 Conversion Costs c. Calculation of unit costs. Round your answer to the nearest cent. 5.70 per unit d. Cost of ending work in process and cost of goods transferred out. Cost of ending work in process: $ 25,050 Cost of goods transferred out: $ 170,500 35,800 159,750 e. A cost reconciliation. Costs to account for: Beginning work in process Costs incurred Total costs to account for Costs accounted for: Transferred out Ending work in process Total costs accounted for 195,550 170,500 25,050 195,550 Feedback 2. Prepare journal entries that show the flow of manufacturing costs for the Molding Department. (a) Materials are added at the beginning of the process, (b) conversion costs are recorded, and (c) units are transferred to the Assembly Department. (a) Work in Process-Molding 159,750 X Materials Inventory 159,750 x (b) (c) Feedback 3. Repeat Requirements 1 and 2 for the Assembly Department. a. A physical flow schedule 35,800 X 25,000 x 35,000 X Muskoge Company Assembly Department Physical Flow Schedule Units to account for: Units, beginning work in process Units started in February (transferred in) Total units to account for Units accounted for: Units completed and transferred out: Started and completed From beginning work in process Units, ending work in process Total units accounted for 30,000 X 5,000 X 35,000 X Feedback b. An equivalent units calculation Total Equivalent Units Direct Materials Conversion Costs Transferred In c. Calculation of unit costs. If required, round your intermediate computations and final answer to four decimal places and use the rounded . answer in subsequent computations. 5.69 X per unit d. Compute the following. For interim computations, carry amounts out to four decimal places. Round your final answers to the nearest dollar. Cost of ending work in process: 27,675 x Cost of goods transferred out: $386,175 x e. A cost reconciliation. When necessary, round equivalent cost per unit to four decimal places, and round all other amounts to the nearest dollar 0 X 353,750 413,850 X Costs to account for: Beginning work in process Costs incurred Total costs to account for Costs accounted for: Transferred out Ending work in process Total costs accounted for 385,175 x 27,675 x 413,850 x Note: Cost reconciliation totals differ by $1 due to rounding error. Feedback Prepare journal entries that show the flow of manufacturing costs for the Assembly Department. (a) Materials are added at the end of the process, (b) conversion costs are recorded, and (c) the units are transferred to Finished Goods. a (a) 159,750 X (b) (c) Feedback
