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XYZ Company uses two processes for mixing in department A and firing in department B to produce a particular product. Direct materials are introduced at

XYZ Company uses two processes for mixing in department A and firing in department B to produce a particular product. Direct materials are introduced at the beginning of the process in department and additional materials are added at the firing process in department B. Conversion costs are distributed evenly throughout the production process. As the process in department A is completed goods are transferred in department B and as goods are completed in department they are transferred to finished goods inventory. Data for the mixing department for the month of November 2003 was provided as follows:

 Required: 

a) Determine the costs of goods transferred out of department A

b) Determine the ending WIP inventory (use both WAM and FIFO methods)

Beginning WIP inventory Direct materials Conversion costs shs4000 shs1100 Shs 5100 Units started during November Units completed and transferred out In firing department Costs added during the month Direct materials Conversion costs 10000 units (40%) 40000units 48000 shs22000 shs 18000 Shs40000 Ending WIP inventory 2000 units (50%)* *Means that each cost in the opening WIP inventory and ending WIP inventory is in terms of 40% and 50% as regards the conversion costs respectively.

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