Professional Documents
Culture Documents
ACCOUNTING
Department Department
A B
Equivalent units
Direct Conversion
Flow of Production Materials Costs
Completed and
transferred out 30,000 30,000
Work in process,
ending 5,000 (100%) 1,000 (20%)
Current period work 35,000 31,000
©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 17 - 9
Compute Equivalent Unit Costs
(Step 3)
Materials Conversion
Completed and transferred 31,000 31,000
Ending inventory 5,000 1,000
Equivalent units 36,000 32,000
100% 20%
©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 17 - 19
Compute Equivalent
Unit Costs (Step 3)
Materials Conversion
Beginning inventory $ 2,350 $ 5,200
Current costs 84,050 62,000
Total $86,400 $67,200
Equivalent units 36,000 32,000
Cost per unit $2.40 $2.10
Materials Conversion
Completed
and transferred: 31,000 31,000
Ending inventory 5,000 (100%) 1,000 (20%)
36,000 32,000
Beginning inventory 1,000 (100%) 600 (60%)
Equivalent units 35,000 31,400
Materials Conversion
Current costs $84,050 $62,000
Equivalent units 35,000 31,400
Cost per unit $2.40 $1.975
An alternative approach:
Costs to account for $153,600
– Cost in ending inventory $ 13,975
= Costs transferred out $139,625
©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 17 - 34
Key T-Account: FIFO