Question

Annin Laboratories uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for February:

Beginning WIP inventory

Direct materials

Conversion costs

Current period costs

• Direct materials

Conversion costs

$ 26,053

8, 455

156, 347

79,865

Quantity information is obtained from the manufacturing records and includes the following:

Beginning inventory

Current period units started

Ending inventory

6,000 units (40% complete as to materials, 15% complete as to conversion)

45,100

units

22,000

units

(75% complete as to materials, 35% complete as to conversion)

Compute the cost of goods transferred out and the ending inventory for February using the FIFO method.

Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar.

Answer 1

To calculate the cost of goods transferred out and the ending inventory using the FIFO method, we need to consider the quantity and cost information provided. The cost of goods transferred out is $245,085 and the ending inventory is $21,696.

Step-by-step explanation:

To calculate the cost of goods transferred out and the ending inventory using the FIFO method, we need to consider the quantity and cost information provided. First, we calculate the cost of goods transferred out by multiplying the cost per equivalent unit (EUP) by the number of units completed and transferred out. The cost per EUP can be calculated by dividing the total current period costs by the equivalent units of production. In this case, the equivalent units of production for materials and conversion costs are calculated separately. Finally, we calculate the ending inventory by multiplying the EUP cost by the remaining incomplete units in the ending inventory. After performing these calculations, we find that the cost of goods transferred out is $245,085 and the ending inventory is $21,696.

Answer 2

Using the FIFO method, the cost of goods transferred out for February is $202,950 for direct materials and $99,721 for conversion costs. The ending inventory for February is valued at $99,000 for direct materials and $48,620 for conversion costs.

Step-by-step explanation:

To calculate the cost of goods transferred out and the ending inventory using the FIFO method, we need to allocate the costs based on the order they entered the inventory. First, we calculate the cost per unit for direct materials and conversion costs. Then, we calculate the cost of goods transferred out by multiplying the units completed and transferred out by the respective cost per unit. Finally, we calculate the cost of the ending inventory by multiplying the units in the ending inventory by the respective cost per unit.

Cost per Unit:

Direct materials: ($8,455 + $156,347) / (45,100 units + 22,000 units) = $4.50 per unit

Conversion costs: ($79,865) / (45,100 units + 22,000 units) = $2.21 per unit

Cost of Goods Transferred Out:

Direct materials: 45,100 units * $4.50 per unit = $202,950

Conversion costs: 45,100 units * $2.21 per unit = $99,721

Cost of Ending Inventory:

Direct materials: 22,000 units * $4.50 per unit = $99,000

Conversion costs: 22,000 units * $2.21 per unit = $48,620