Fifo fifo method cost reconciliation assembly

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Unformatted text preview: t of beginning Work in Process Inventory Costs added to production during the period Total cost to be accounted for Cost accounted for as follows: Cost of ending Work in Process Inventory Cost of units transferred out Total cost accounted for Wang 2013 $ $ $ $ 10,039 199,751 209,790 14,911 194,879 209,790 48 Process Costing in Sequential Production Departments Two Sequential Production Departments Work-in-Process Inventory Work-in-Process Inventory Production Department A Production Department B Direct material Direct labor Applied manufacturing overhead Cost of goods c ompleted & Transferredin costs transferred out Different types of cost but same treatment Direct material Direct labor Applied manufacturing overhead newly incurred costs Transferred-in costs • The costs assigned to the units transferred out of one department remain assigned to those units as they enter the next department • Conceptually similar to direct material costs – Direct material costs relate to raw materials, whereas transferred-in costs relate to partially completed products Wang 2013 49 Process Costing in Sequential Production Departments Example: Golden Life Co. manufactures a plant nutrient known as Garden Pride. The manufacturing process begins in the Grading Department when raw materials are added at the beginning of the process. Upon completion of the processing in the Grading department, the output is transferred to the Saturating Department for the final phase of production. Here the product is saturated with water and then dried again. There is no weight gain in the process, and the water is virtually cost-free. The following information is available for the month of November: November 30 November 1 Work-in-process Inventory Quantity (pounds) Grading Department None Saturating Department 1,600 Cost Quantity (pounds) - None $17,600* 2,000 No beg inventory Transferring & Conversion costs No ending inventory *Includes $3,750 in Saturating Department conversion costs. Wang 2013 50 Process Costing in Sequential Production Departments The work-in-process inventory in the Saturating Department is est...
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