Question:

Lexington Company produces baseball bats and cricket paddles. It has two departments that process all products. During July, the beginning work in process in the cutting department was half completed as to conversion, and complete as to direct materials. The beginning inventory included $40,000 for materials and $60,000 for conversion costs. Ending work-in-process inventory in the cutting department was 40% complete. Direct materials are added at the beginning of the process.

Beginning work in process in the finishing department was 80% complete as to conversion. Direct materials for finishing the units are added near the end of the process. Beginning inventories included $24,000 for transferred-in costs and $28,000 for conversion costs. Ending inventory was 30% complete. Additional information about the two departments follows:

	Cutting	Finishing
Beginning work-in-process units	20,000	24,000
Units started this period	60,000
Units transferred this period	64,000	68,000
Ending work-in-process units		20,000
Material costs added	$48,000	$34,000
Conversion costs	28,000	68,500
Transferred-out cost	128,000

Required:

Prepare a production cost worksheet, using FIFO for the finishing department.

Solution:

Production Cost Worksheet

Finishing Department

FIFO Method

Flow of production	Physical Units	Direct Materials	Conversion	Trans-In
Work in process, beginning	24,000
Started during period	64,000
To account for	88,000
Good units completed
Beginning work in process	24,000	24,000	4,800
Started and completed	44,000	44,000	44,000	44,000
Ending work in process	20,000	0	6,000	20,000
Accounted for	88,000	68,000	54,800	64,000

Costs	Totals	Direct Materials	Conversion	Trans-in
WIP, beginning	$52,000
Costs added during period	230,500	$34,000	$68,500	$128,000
Total costs to account for	$282,500	$34,000	$68,500	$128,000
Divided by equivalent units		68,000	54,800	64,000
Equivalent-unit costs	$ 3.75	$ 0.50	$1.25	$ 2.00

Assignment of costs
Work in process, beginning		$52,000
Completion of beginning
Direct Materials (24,000 $0.50)	$12,000
Conversion (4,800 $1.25)	6,000	$18,000
Total Beginning Inventory		70,000
Started and Completed (44,000 $3.75)		165,000
Total costs transferred out		235,000
Work in process, ending
Transferred-in (20,000 $2.00)	$40,000
Conversion (20,000 $1.25 0.30)	7,500	47,500
Costs accounted for		$282,500

Could you provide working notes?