FIFO Costing Method

Name:

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Course:

Date:

FIFO Costing Method

GOOD FOODS INC.

PROCESS COSTING REPORT USING FIFO METHOD

AS AT JANUARY 31

accounting for physical unitsBeginning inventory Units started last month

5000

Units started this month

90000

To account for

95000

accounting for equivalent units

physical units

Direct materials

% incurred

Conversion

% incurred during period

Beginning inventory completed Jan

5000

_

0

3000

60

Started & completed Jan

89000

89000

100

89000

100

Started but not complete

1000

1000

100

1000

100

Units accounted for

95000

90000

93000

accounting for costs

Total cost Beginning cost

33790

28560

Add

5230

Current cost

631200

450000

Add

181200

Total

664990

Total cost

cost per equivalent unit

current units (450000/90000)(181200/93000)

5

1.9483871

goods transferred & ending inventory

From beginning inventory

33,790

Current costs to complete

5,845

0

(3000*1.9483871) Units started & completed

618,406

(89000*5)Add(89000*1.9483871)ending inventory

6,948

(1000*5)Add(1000*1.9483871) TOTAL COST

664,990

The analysis of the cooking department will be quite different form the mixing department. The cooking department’s output will depend on the output of the mixing department. When the mixture is cooking, no more can be added. Therefore, at the cooking department costs will only involve conversion costs, which are the normal labor costs and overheads. Since no direct materials are added in this process, there shall be no physical costs. In the mixing department, the costs involve five steps, which are accounting for physical units, equivalent units, costs, cost per equivalent unit, and goods transferred to cooking department. For the cooking department, most of these processes will not be there since it only involves heating and simmering the mixture. Once the cooking process begins, it cannot be stopped. In this department, there is no ending inventory since all the mixture was cooked and no spillage or evaporation took place. Additionally, there is no beginning inventory within this department since no materials can be added during the process. Thus, all material that came in was cooked and transferred to the canning department for the final process. The work in progress, in this department, involves the amount of mixture that is cooking, while the inventory will be the mixture waiting to be cooked (Crosson & Needles, 2010).

Reference

Crosson, S.V. & Needles, B.E. (2010). Managerial Accounting. New York, N.Y: Cengage Learning.

Post Author: admin

Leave a Reply

Your email address will not be published. Required fields are marked *

x

Hi!
I'm Eddie!

Would you like to get a custom essay? How about receiving a customized one?

Check it out