Krollon Company uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the company’s processing departments:
According to the company’s costing system, the cost of beginning inventory was $7,886, of which $4,897 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $181,652. The costs per equivalent unit for the month were:
Required:
1. Compute the total cost per equivalent unit for the month.
2. Compute the equivalent units of material and of conversion costs in the ending inventory.
3. Compute the equivalent units of material and of conversion costs that were required to complete the beginning inventory
4. Determine the number of units started and completed during the month.
5. Determine the costs of ending inventory and units transferred out.
1. Compute the total cost per equivalent unit for the month. 18.20 + 23.25 = 41.45
2. Compute the equivalent units of material and of conversion costs in the ending inventory.
Equivalent units in ending inventory = units in ending inventory x % completed
Material = 300 * 80% = 240
Conversion = 300 * 40% = 120
Equivalent units in beginning inventory = units in ending inventory x % completed
Material = 400 * 70% = 280
Conversion = 400 * 30% = 120
2. Determine the number of units started and completed during the month.
units started into production – units in ending WIP
4400 – 400 = 4000
3. Determine the costs of ending inventory and units transferred out.
Material Conversion
Ending WIP inventory:
Equivalent units of production 240 120
Cost per equivalent unit 18.2 23.25
Cost of ending WIP inventory 4,368 390
Units transferred out:
Cost from beginning WIP inventory 7,886 4,897 12,783
Cost to complete the beginning WIP inventory
Equivalent units of production 280 120
Cost per equivalent unit 18.2 23.25
Cost to complete the units beginning WIP inventory 5,096 2,790 7,886
Cost of units started & completed during the period
Units started & completed this period 4,000 4,000
Cost per equivalent unit 18.2 23.25
Cost of units started & completed during the period 72,800 93,000 165,800
Total cost of units transferred out $186,469
1. Well, let's crunch some numbers to find the total cost per equivalent unit for the month. We start by adding the cost of beginning inventory ($7,886) to the costs added during the month ($181,652), which gives us a total cost of $189,538. Then we divide this total cost by the total equivalent units produced during the month. Unfortunately, you didn't provide the number of equivalent units produced, so I can't compute the total cost per equivalent unit. Do you have that information?
2. To compute the equivalent units of material and conversion costs in the ending inventory, you'd need to know the number of units in ending inventory and the percentage completion of those units for each cost category. Since you haven't provided these details, I'm afraid I can't compute the equivalent units for you.
3. Calculating the equivalent units of material and conversion costs required to complete the beginning inventory would require information on the number of units in the beginning inventory and their percentage completion for each cost category. Without that information, it's impossible to determine the equivalent units.
4. Determining the number of units started and completed during the month would require knowing the number of units started and the number of units in ending inventory. Unfortunately, these figures are missing from your question, so I'm unable to help with this calculation.
5. Lastly, determining the costs of ending inventory and units transferred out would necessitate knowing the number of units in ending inventory, the percentage completion for each cost category, and the cost per equivalent unit. Since you're missing crucial information, I regret to inform you that I can't compute these costs.
Apologies for the limitations, but accurate calculations require complete data. Feel free to provide more information, and I'll be happy to assist you further!
1. To compute the total cost per equivalent unit for the month, we need to find the total cost and the equivalent units.
To find the total cost, we add the cost of beginning inventory ($7,886) and the costs added during the month ($181,652):
Total cost = Beginning inventory cost + Costs added during the month
= $7,886 + $181,652
= $189,538
To find the equivalent units, we need to consider the units completed and transferred out as well as the units in ending inventory. Since the FIFO method is used, the units in ending inventory are considered to be from the previous month.
2. The equivalent units of material and of conversion costs in the ending inventory can be determined by multiplying the equivalent units by the percentage of completion.
3. The equivalent units of material and of conversion costs that were required to complete the beginning inventory can be calculated by multiplying the number of units in beginning inventory by the percentage of completion.
4. The number of units started and completed during the month is determined by subtracting the units in ending inventory from the total units accounted for (beginning inventory + units started during the month).
5. The costs of ending inventory and units transferred out can be calculated by multiplying the equivalent units of material and conversion costs in ending inventory and units completed and transferred out respectively, by the total cost per equivalent unit.
To answer these questions, we need to understand the FIFO (First-In, First-Out) method used by Krollon Company in its process costing system.
1. Compute the total cost per equivalent unit for the month:
The total cost per equivalent unit can be calculated by dividing the total cost incurred during the month by the equivalent units produced. In this case, the costs added during the month amounted to $181,652. To calculate the equivalent units, we need information about the number of units completed and the units in ending inventory, which will be provided in subsequent questions.
2. Compute the equivalent units of material and conversion costs in the ending inventory:
To determine the equivalent units of material and conversion costs in the ending inventory, we need to know the units completed and the number of units in the ending inventory. This information will allow us to determine the amount of materials and conversion costs attributed to the ending inventory.
3. Compute the equivalent units of material and conversion costs that were required to complete the beginning inventory:
To calculate the equivalent units of material and conversion costs required to complete the beginning inventory, we need to know the number of units started and completed during the month. This will give us the information necessary to determine the amount of materials and conversion costs needed to complete the units that were already in progress at the beginning of the month.
4. Determine the number of units started and completed during the month:
To determine the number of units started and completed during the month, we need information about the units in the beginning inventory, units completed, and units in the ending inventory. By analyzing this data, we can determine the number of units that were started and completed during the month.
5. Determine the costs of ending inventory and units transferred out:
To determine the costs of ending inventory and units transferred out, we need to know the unit costs and the number of units in the ending inventory, as well as the number of units completed and transferred out during the month. This information will allow us to calculate the total cost of units transferred out and the cost of units remaining in the ending inventory.
In summary, to answer the questions, we need information about units completed, units in the ending inventory, units started and completed, and unit costs. With this information, we can perform the necessary calculations to determine the total cost per equivalent unit, equivalent units in the ending inventory, equivalent units required to complete the beginning inventory, the number of units started and completed, and the costs of ending inventory and units transferred out.