Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 53

FIFO Method; Two Departments Bhatti Company produces plastic photo frames. Two departments, molding and finishing, are involved in the manufacturing. The molding department fills the molds with hot liquid plastic that is left to cool and then opens them. The finishing department removes the plastic frame from the mold and strips the edges of the frames of extra plastic.

The following information is available for the month of January:

	January 1		January 31
Work-in-Process Inventory	Quantity (pounds)	Cost	Quantity (pounds)	Cost
Molding department	None	—	None	—
Finishing department	5,000	$15,000	2,000	?

The work-in-process inventory in the finishing department is estimated to be 40 percent complete both at the beginning and end of January. Costs of production for January follow:

Costs of Production	Materials Used	Conversion
Molding department	$450,000	$90,000
Finishing department	—	80,000

The material used in the molding department weighed 50,000 pounds. The firm uses the FIFO method of process costing.

Required Prepare a report for both the molding and finishing departments for the month of January.

The report should include equivalent units of production (in pounds), total manufacturing costs, cost per

equivalent unit (pounds), cost of ending work-in-process inventory, and cost of goods completed and

transferred out.