In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 500 towels were in process and were 60 percent complete. The costs incurred were $162.

During the month, costs of $18,000 were incurred, 4,000 towels were started, and 250 towels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete.

Required:

a. Prepare a production cost report: the company uses FIFO process costing.

RECYCLERS, INC.
Production Cost ReportFIFO
	Physical Units	Total Costs	Conversion Costs
Flow of Production Units
Units to be accounted for:
Beginning WIP inventory
Units started this period
Total units to be accounted for
Units accounted for:
Units completed and transferred out:
From beginning inventory
Started and completed currently
Units in ending WIP inventory
Total units accounted for
Costs to be accounted for:
Costs in beginning WIP inventory
Current period costs
Total costs to be accounted for
Cost per equivalent unit:
Conversion costs
Costs accounted for:
Costs assigned to units transferred out:
Costs from beginning inventory
Current costs added to complete beginning WIP inventory:
Conversion costs
Total costs from beginning inventory
Current costs of units started and completed:
Conversion costs
Total costs of units started and completed
Total costs of units transferred out
Costs assigned to ending WIP inventory:
Conversion costs
Total ending WIP inventory
Total costs accounted for

b. Show the flow of costs through T-accounts. Assume that current period conversion costs are credited to various payables.

Work in Progress

Beginning Inventory. ____ ____

________________ ____ ____

________________ ____ ____ ________________

This Period's cost:

________________ ____ ____ ________________

________________ ____ ____ ________________

Ending inventory

________________ ____ ____ ________________

Finished goods inventory

Beg. bal. ____ ____

____ ____

____ ____

End. bal. ____ ____

Various Payable

Beg. bal. ____ ____

____ ____

____ ____

End. bal. ____ ____