Fifo method unit cost valuation of goods transferred out and ending

FIFO METHOD, UNIT COST, VALUATION OF GOODS TRANSFERRED OUT AND ENDING WORK IN PROCESS Dama Company produces women’s blouses and uses the FIFO method to account for its manufacturing costs. The product Dama makes passes through two processes: cutting and sewing. During April, Dama’s controller prepared the following equivalent units schedule for the cutting department:

 

Direct

Conversion

 

Materials

Costs

Units started and completed

40,000

40,000

Units, beginning work in process:

 

 

10,000 * 0%

10,000 * 50%

5,000

Units, ending work in process:

 

 

20,000 * 100%

20,000

20,000 * 25%

5,000

Equivalent units of output

60,000

 50,000

Costs in beginning work in process were direct materials, $20,000; conversion costs, $80,000. Manufacturing costs incurred during April were direct materials, $240,000; conversion costs, $320,000.

Required:

1. Prepare a physical flow schedule for April.

2. Compute the cost per equivalent unit for April.

3. Determine the cost of ending work in process and the cost of goods transferred out.

4. Prepare the journal entry that transfers the costs from cutting to sewing.

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