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Answered by SirFranklin

FIFO METHOD
Cost of Transferred Out = 873,490
Cost of WIP, end = 84,230

Weighted Average Method

Cost of Transferred Out = 858,800
Cost of WIP, end = 93,850

Step-by-step explanation

FIFO METHOD

Image transcription text

Physical Units Materials Conversion Word Done

Equivalent Units Word Done Equivalent
Units WIP, Beg. 0.000 Units Started 65,000
75,000 Units Completed: WIP, beg. 0.000
0% .000 Units Started&Completed 50,000 100%
50,000 100% 50,00...
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First Step is to find the Equivalent Units of Production. Under FIFO method, we had to
take into account the WIP, beg. We also have to assign Work Done percentage to the Lost
Units because they were discovered at the inspection point and the WIP, end had reached
out the inspection point. (WIP, end is 80% complete while the inspection point is 75%).
Thus, the equivalent Units are 65,000 and 62,625 for materials and conversion
respectively.

Next step is to compute for the Cost per Equivalent Units. It is done by dividing the Cost
added during the period by the Equivalent Units. Thus, the cost per equivalent units are
4.29 and 8.10 for materials and conversion respectively.

Next is to Allocate the Cost of Normal lost Units to the Transferred Out and WIP, end
based on their number of units. Thus, the shares in cost of normal loss are 27,640 and
3,455 for materials and conversion respectively.
We can now compute the cost of transferred out and the ending Inventory.

For the Transferred Out, add the cost of the WIP, beg and the Cost added to it for this
period. Also add the Cost of started and conpleted units which is computed as the number
of units multiplied by the total cost per unit. And lastly is to add the share in the cost of
normal loss. Thus, the Cost of Transferred Out is 873,490.

For the WIP, end, compute the cost as to materials and conversion by multiplying the
equivalent units by the cost per equivalent unit. And add the result with its share in the
cost of Normal Loss. Thus, the Cost of WIP, end is 84,230.

WEIGHTED AVERAGE METHOD

Image transcription text

Physical Units Materials Conversion Word Done

Equivalent Units Word Done Equivalent
Units WIP, Beg. 10,000 Units Started 65,000
75,000 Units Completed 60,000 00%
60,000 00% 60,000 WIP, end 7,500 100% 7.500
30% 6,000 Normal Spoila...
Show more

Under Weighted Average Method, same with FIFO wherein we had to find the equivalent
Units of Production first. Here, the units completed are automatically 100% without
considering the WIP, beg. Thus, the equivalent Units are 75,000 and 71,625 for materials
and conversion respectively.

In computation of Cost per Equivalent Units, the Cost of WIP, beg. is added to the cost
added during the period and then multiply by the equivalent units. Thus, the Cost per
Equivalent Unit are 4.80 and 9.00 for materials and conversion respectively.

Same steps with the FIFO as to allocation of the Cost of Normal lost Units.

Cost of transferred out is computed as the units completed multiplied by the total cost per
unit then add the share in the cost of normal lost units. Thus, the Cost of Transferred Out
is 858,800.

The cost of WIP is computed same with the FIFO. Thus, the Cost of WIP, end is 93,850.

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