Groupers Closet massproduces luxurious sleepwear for women C

Grouper’s Closet mass-produces luxurious sleepwear for women. Consider the following data for the flannel nightgown department for the month of January. All direct materials are added at the beginning of production in the department, and conversion costs are incurred evenly throughout production. Inspection occurs when production is 100% completed. Normal spoilage is 6,600 units for the month.

74,000

85,000

16,000

85,000

28,000

973,000

$

2,759,000

Prepare a process cost report using the FIFO method.

———

		Physical
		Units
Beginning WIP (25% complete)			11,000
Started during January			74,000
	Total to account for			85,000
Good units completed and transferred out during current period:
	From beginning work in process			11,000
	Started and completed			50,000
Spoiled units			8,000
Ending WIP (75% complete)			16,000
	Total accounted for			85,000
Costs
Beginning WIP:
	Direct materials		$	204,000
	Conversion costs			28,000
		Total beginning WIP			232,000
Costs added during current period:
	Direct materials			1,554,000
	Conversion costs			973,000
		Costs to account for		$	2,759,000

Solution

FIFO method Beggining units 11000 Transferred out 61,000 Started intro production 74000 Normal spoilage 6600 Abnormal spoilage 1,400 Ending units 16,000 85000 85,000 Equivalent units Material Conversion Beginning units 11000 11000 Completion in current period 0% 75% A 0 8250 Units started and completed 50,000 50,000 Completion 100% 100% B 50000 50000 Abnormal spoilage 1,400 1,400 Completion 100% 100% C 1400 1400 Ending Units 16,000 16,000 Completion 100% 75% D 16000 12000 Total units A+B+C 67400 71650 Per unit cost Cost Total units Per unit cost Material cost 1554000 67400 23.06 Conversion cost 973000 71650 13.58 2527000 36.64 Cost of goods sold Material convertion cost Beginning inventory completed Completion 0% 75% Per unit cost 23.06 13.58 Units 11000 11000 Total cost   A 0 112034 112034 Abnormal spoilage Completion 100% 100% Per unit cost 23.06 13.58 Units 1,400 1,400 Total cost    B 32279 19012 51291 Units started and completed Completion 100% 100% Per unit cost 23.06 13.58 Units 50,000 50000 Total cost   C 1152819 678995 1831814 Beginning WIP 204000 28000 232000 Total A+B+C 2227139 Ending work in progress Completion 100% 75% Per unit cost 23.06 13.58 Units 16,000 16,000 Total cost     368902 162959 531861 Total cost accounted for 2759000