17-40
The FIFO ending inventory is higher than the weighted-average ending inventory by
$3,750. This is because FIFO assumes that all the lower-cost prior-period units in work in
process (resulting from the lower transferred-in costs in beginning inventory) are the first to be
completed and transferred out while ending work in process consists of only the higher-cost
current-period units. The weighted-average method, however, smoothes out cost per equivalent
FIFO Method of Process Costing,
Binding Department of Bookworm, Inc. for April 2012.
(Step 1)
(Step 2)
Equivalent Units
Flow of Production
Physical
Units
Transferred-in
Costs
Direct
Materials
Conversion
Costs
Work in process, beginning (given)
1,050
(work done before current period)
Transferred-in during current period (given)
2,400
To account for
3,450
Completed and transferred out during current period:
From beginning work in processa
1,050
[1,050
(100% – 100%); 1,050
(100% – 0%); 1,050
(100% – 50%)]
0
1,050
525
Started and completed
1,650b
(1,650
100%; 1,650
100%; 1,650
100%)
1,650
1,650
1,650
Work in process, endingc (given)
750
(750
100%; 750 0%; 750
70%)
____
750
0
525
Accounted for
3,450
____
____
____
Equivalent units of work done in current period
2,400
2,700
2,700
a Degree of completion in this department: Transferred-in costs, 100%; direct materials, 0%; conversion costs, 50%.
b 2,700 physical units completed and transferred out minus 1,050 physical units completed and transferred out from beginning
work–in-process inventory.
c Degree of completion in this department: transferred-in costs, 100%; direct materials, 0%; conversion costs, 70%.
17-41
SOLUTION EXHIBIT 17-39B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units
Completed and to Units in Ending Work in Process;
FIFO Method of Process Costing,
Binding Department of Bookworm, Inc. for April 2012.
Total
Production
Costs
Transferred-in Costs
Direct
Materials
Conversion
Costs
(Step 3)
Work in process, beginning (given)
$ 50,400
$ 36,750
$ 0
$13,650
Costs added in current period (given)
218,490
124,800
23,490
70,200
Total costs to account for
$268,890
$161,550
$23,490
$83,850
(Step 4)
Costs added in current period
$124,800
$23,490
$70,200
Divide by equivalent units of work done in current period (Sol.
Exhibit 17-39A)
÷ 2,400
÷ 2,700
÷ 2,700
Cost per equivalent unit of work done in current period
$ 52.00
$ 8.70
$ 26.00
(Step 5)
Assignment of costs:
Completed and transferred out (2,700 units)
Work in process, beginning (1,050 units)
$ 50,400
$36,750 + $0 + $13,650
Costs added to beginning work in process in current period
22,785
(0a × $52.00) + (1,050a × $8.70) + (525a × $26)
Total from beginning inventory
73,185
Started and completed (1,650 units)
143,055
(1,650b × $52.00) + (1,650b × $8.70) + (1,650b × $26)
Total costs of units completed and transferred out
216,240
Work in process, ending (750 units):
52,650
(750c × $52.00) + (0c × $8.70) + (525c × $26)
Total costs accounted for
$268,890
$161,550
+ $23,490
+ $83,850
a Equivalent units used to complete beginning work in process from Solution Exhibit 17-39A, step 2.
b Equivalent units started and completed from Solution Exhibit 17-39A, step 2.
c Equivalent units in ending work in process from Solution Exhibit 17-39A, step 2.
17-42
17-40 (45 min.) Transferred-in costs, weighted-average and FIFO methods.
1. Solution Exhibit 17-40A computes the equivalent units of work done to date in the
Drying and Packaging Department for transferred-in costs, direct materials, and conversion
2. Solution Exhibit 17-40C computes the equivalent units of work done in week 37 in the
Drying and Packaging Department for transferred-in costs, direct materials, and conversion
costs. Solution Exhibit 17-40D summarizes total Drying and Packaging Department costs for
week 37, calculates the cost per equivalent unit of work done in week 37 in the Drying and
Packaging Department for transferred-in costs, direct materials, and conversion costs, and
17-43
SOLUTION EXHIBIT 17-40B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total
Costs to Units Completed and to Units in Ending Work in Process;
Weighted-Average Method of Process Costing,
Drying and Packaging Department of Frito-Lay Inc. for Week 37.
Total
Production
Costs
Transferred
-in Costs
Direct
Materials
Conversion
Costs
(Step 3)
Work in process, beginning (given)
$ 30,770
$ 26,750
$ 0
$ 4,020
Costs added in current period (given)
142,450
91,510
23,000
27,940
Total costs to account for
$173,220
$118,260
$23,000
$31,960
(Step 4)
Costs incurred to date
$118,260
$23,000
$31,960
Divide by equivalent units of work done
to date (Solution Exhibit 17-40A)
5,400
4,000
4,700
Equivalent unit costs of work done to date
$ 21.90
$ 5.75
$ 6.80
(Step 5)
Assignment of costs:
Completed and transferred out (4,000 units)
$137,800
(4,000a $21.90) + (4,000a $5.75) + (4,000a $6.80)
Work in process, ending (1,400 units)
35,420
(1,400b $21.90) + (0b $5.75) + (700b $6.80)
Total costs accounted for
$173,220
$118,260 + $23,000 + $31,960
a Equivalent units completed and transferred out from Solution Exhibit 17-40A, Step 2.
b Equivalent units in ending work in process from Solution Exhibit 17-40A, Step 2.
17-44
SOLUTION EXHIBIT 17-40C
Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;
FIFO Method of Process Costing,
Drying and Packaging Department of Frito-Lay Inc. for Week 37.
(Step 1)
(Step 2)
Equivalent Units
Flow of Production
Physical
Units
Transferred-
in Costs
Direct
Materials
Conversion
Costs
Work in process, beginning (given)
Transferred-in during current period (given)
To account for
1,200
4,200
5,400
(work done before current period)
Completed and transferred out during current period:
From beginning work in process§
1,200
(100% − 100%); 1,200
(100% − 0%);
1,200
(100% − 25%)
1,200
0
1,200
900
Started and completed
2,800
100%; 2,800
100%; 2,800
100%
2,800†
2,800
2,800
2,800
Work in process, ending* (given)
1,400
100%; 1,400
0%; 1,400
50%
1,400
1,400
0
700
Accounted for
5,400
Equivalent units of work done in current period
4,200
4,000
4,400
§Degree of completion in this department: Transferred-in costs, 100%; direct materials, 0%; conversion costs, 25%.
†4,000 physical units completed and transferred out minus 1,200 physical units completed and transferred out from
beginning work-in-process inventory.
*Degree of completion in this department: transferred-in costs, 100%; direct materials, 0%; conversion costs, 50%.
SOLUTION EXHIBIT 17-40D
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to
Units Completed and to Units in Ending Work in Process;
FIFO Method of Process Costing,
17-46
17-41 (30-35 min.) Weighted-average and standard-costing method.
2. and 3. Solution Exhibit 17-41B summarizes total costs of the Penelope’s Pearls
Company for November 30, 2012 and, using the standard cost per equivalent unit for direct
materials and conversion costs, assigns these costs to units completed and transferred out and to
units in ending work in process. The exhibit also summarizes the cost variances for direct
materials and conversion costs for November 2012.
17-47
SOLUTION EXHIBIT 17-41B
Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per
Equivalent Unit, and Assign Total Costs to Units Completed and to Units in
Ending Work in Process;
Standard-Costing Method of Process Costing,
17-48
1. Since there was no additional work needed on the beginning inventory with respect to
materials, the initial mulch must have been 100% complete with respect to materials.
2. It is clear that the ending WIP is also 100% complete with respect to direct materials
3. We can first obtain the total standard costs per unit. The number of units started and
completed during August is 845,000, and a total cost of $6,717,750 is attached to
them. The per unit standard cost is therefore ($6,717,750 ÷ 845,000) = $7.95. If x
4. The opening WIP inventory contained 965,000 equivalent units of materials and