Concept explainers
(Appendix 6A) First-In, First-Out Method
Refer to Problem 6-67.
Required:
Prepare a production report for the mixing and encapsulating departments using the FIFO method. (Note: Round the unit cost to four decimal places.) (Hint: For the second department, you must convert gallons to capsules.)
Make production report of Company BP by applying FIFO method.
Explanation of Solution
Production Report:
The document comprises all the activities of process department related to manufacturing which occurs; in a particular period of time is called production report. It helps to identify the efficiency of process department.
Prepare production report of company M as shown below:
Company BP | |||||
Mixing Department | |||||
Production Report for March Month | |||||
FIFO Method | |||||
Unit Information | |||||
Physical Flow: | |||||
Units to accounts for: | Units | Units to accounted for: | Units | ||
Units in BWIP | 10 | Unit started and completed | 130 | ||
Units started | 150 | From BWIP | 10 | ||
Units in EWIP | 20 | ||||
Total units to account for | 160 | Total units accounted for | 160 | ||
Equivalent Units | |||||
Started and completed | 130 | ||||
To complete BWIP | 6 | ||||
Units in EWIP | 10 | ||||
Total equivalent units | 146 | ||||
Cost Information | |||||
Cost to account for: |
Material (In$) |
Conversion (In$) |
Total (In$) | ||
Cost in BWIP | 252 | 846 | 1,098 | ||
Cost added by department | 3,636 | 13,854 | 17,490 | ||
Total cost to account for: | 3,888 | 14,700 | 18,588 | ||
Cost per equivalent unit | $119.7945 | ||||
Costs to account for: | Transferred out (In $) |
EWIP (In $) |
Total (In $) | ||
Transferred out: | |||||
Units started and completed | 15,573 | 15573 | |||
Units in BWIP: | |||||
From prior period | 1,098 | 1,098 | |||
From current period | 719 | 719 | |||
Goods in EWIP | 1198 | 1198 | |||
Total cost accounted for: | 17,390 | 1,198 | 18,588 |
Table (1)
Therefore, cost per equivalent unit, equivalent units and total cost are $119.7495, 146 gallons and $18,588 respectively.
Prepare production report of company BP as shown below:
Company BP | ||||||||
Encapsulating Department | ||||||||
Production Report for March Month | ||||||||
FIFO Method | ||||||||
Unit Information | ||||||||
Physical Flow: | ||||||||
Units to accounts for: | Units | Units to accounted for: | Units | |||||
Units in BWIP | 4,000 | Unit started and completed | 204,000 | |||||
Units started | 210,000 | From BWIP | 4,000 | |||||
Units in EWIP | 6,000 | |||||||
Total units to account for | 214,000 | Total units accounted for | 214,000 | |||||
Equivalent Units | Transferred-in | Material | Conversion | |||||
Started and completed | 204,000 | 204,000 | 204,000 | |||||
To complete BWIP | _ | _ | 2000 | |||||
Units in EWIP | 6,000 | 6,000 | 2,400 | |||||
Total equivalent units | 210,000 | 210,000 | 208,400 | |||||
Cost Information | ||||||||
Cost to account for: | Transferred-in |
Material (In$) |
Conversion (In$) |
Total (In$) | ||||
Cost in BWIP | 140 | 32 | 50 | 222 | ||||
Cost added by department | 15,390 | 1,573 | 4,860 | 23,823 | ||||
Total cost to account for: | 17,530 | 1,605 | 4,910 | 24,045 | ||||
Cost per equivalent unit | $0.0828 | $0.0075 | 0.233 | 0.1136 | ||||
Costs to account for: | Transferred out (In $) |
EWIP (In $) |
Total (In $) | |||||
Transferred out: | ||||||||
Units started and completed | 23,174 | 23,174 | ||||||
Units in BWIP: | ||||||||
From prior period | 222 | _ | 222 | |||||
From current period | 47 | _ | 47 | |||||
Goods in EWIP: | ||||||||
Transferred-in | _ | 497 | 497 | |||||
Material | _ | 45 | 45 | |||||
Conversion | _ | 56 | 56 | |||||
Total cost accounted for: | 23,443 | 598 | 24,041 |
Table (2)
Therefore, cost per equivalent unit, equivalent units and total cost are $0.1136, 628,400 capsules and $24,041 respectively.
Notes:
1. Use this formula to calculate cost per equivalent unit:
2. In table to calculate cost of unit started and completed multiply the unit started and completed and unit cost as shown in table.
3. In table to calculate cost of goods in EWIP, multiply units in EWIP and unit cost as shown in table.
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Chapter 6 Solutions
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