Scenario #2: Second month (with beginning WIP); Same DM price for both prior and current periods + Assume Materials are added at the beginning, Conversion is added evenly. WIP, Beginning Started and finished WIP, Ending Beginning WIP (June 1) Cost added during May Physical Units 1 DM % Conversion % 100% 60% 1 100% 100% 1 100% 30% DM Conversion $50 $60 $100 $170 The beginning WIP inventory is Unit #2 that we started in May Unit #2: $50 material cost (100%) & $60 conversion cost (60% completed), In June, we will continue working on Unit #2: Unit #2: add additional $40 conversion cost (i.e., the remaining 40%) and unit #2 is finished We started another two units in June. Unit #3, we spent $50 material cost & $100 conversion cost and unit #3 is finished. Unit #4: we spent $50 material cost & $30 conversion cost (30% completed), it is our WIP ending inventory. WIP WIP beginning Inventory: Unit #2 $110 including DM $50; CC $60 keep working on Unit #2: CC $40 Unit #3: DM $50 $??? Unit #2 & Unit #3: to Finished Goods Unit #3: CC $100 Unit #4: DM $50 Unit #4: CC $30 WIP ending Inventory: Unit #4 $??? Note: Process costing is used for mass production of identical units such as books and pens. To illustrate the concept, we will use small production volume in this exercise so that you can track material and conversion costs for each unit. But keep in mind, normally we don't track cost for each unit for process costing. Instead we focus on unit cost (=Total costs units of output). Q1: use weighted-average method to calculate COGM (i.e., units completed to FG). Q2: use weighted-average method to calculate the value of WIP ending inventory_ Q3: use FIFO method to calculate COGM (i.e., units completed to FG) Q4: use FIFO method to calculate the value of WIP ending inventory_ Q5: Do we have different results when we use WA versus FIFO?