In its Department R Recyclers Inc processes donated scrap cl

In its Department R. Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 400 towels were in process and were 60 percent complete The costs incurred were $176 During the month, costs of $18,450 were incurred, 4,700 towels were started, and 200 owels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete. a. Prepare a production cost report the company uses FIFO prooess costing. (Round Cost per equivalent unit\" to 2 decimal places.) b. Show the flow of costs through T-accounts. Assume that current period conversion costs are credited to various payables

Solution

a.

b.

Recyclers Inc
Product Cost Report - FIFO
Flow of Production Units	Compute Equivalent Units
Physical Units	Conversion Costs
Units to be accounted for
Beginning WiP	400
Units started in the period	4700
Total units to be accounted for	5100
Units accounted for:
Units completed and transferred out
From Beginning Inventory	400	160
		(400*40%)
Started and completed currently	4500	4500
Units in ending WIP inventory	200	40
		(200*20%)
Total Units accounted for	5100	4700