The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day. Beginning WIP inventory Direct materials $ 982 Conversion costs 377 Current period costs Direct materials 14,965 Conversion costs 9,990 Quantity information is obtained from the manufacturing records and includes the following. Beginning inventory 800 units (65% complete as to materials, 55% complete as to conversion) Current period units started 4,700 units Ending inventory 1,600 units (45% complete as to materials, 15% complete as to conversion) Exercise 8-36 (Algo) Assign Costs to Goods Transferred Out and Ending Inventory: FIFO Method (LO 8-5) Compute the cost of goods transferred out and the ending inventory using the FIFO method.

The Matsui Lubricants

Plant Department

Cost of goods transferred out = $20,904

Cost of ending inventory = $2,774

Explanation:

a) Data and Calculations:

                                            Direct Materials  Conversion    Total

Beginning WIP inventory              $982              $377          $1,359

Current period costs                  14,965            9,990         24,955

                                     Units          Direct Materials  Conversion    

Beginning inventory      800                65%                   55%

Current units              4,700

Total units available  5,500

Transferred out         3,900               100%                 100%

Ending inventory       1,600                 45%                   15%

Equivalent units:

                                        Units   Direct Materials        Conversion    

Beginning inventory         800         520 (65%)               440 (55%)

Units transferred           3,900      3,900 (100%)          3,900 (100%)

Ending inventory            1,600         720 (45%)               240 (15%)

Total equivalent units                    5,140                      4,580

Cost of production:

                                            Direct Materials  Conversion    Total

Beginning WIP inventory              $982              $377          $1,359

Current period costs                  14,965            9,990         24,955

Total cost of production          $15,947         $10,367        $26,314

Cost per EUP:

                                            Direct Materials  Conversion

Total cost of production          $15,947             $10,367

Total equivalent units                  5,140                4,580

Cost per equivalent unit             $3.10                $2.26

Assignment of Costs to:

                                     Direct Materials            Conversion            Total

Beginning inventory      $1,612 (520*$3.10)     $994 (440*$2.26)     $2,606

Transferred out            12,090 (3,900*$3.10)   8,814 (3,900*$2.26) 20,904

Ending inventory           2,232 (720*$3.10)         542 (240*$2.26)       2,774

Total assigned costs $15,934                      $10,350                       $26,284

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