A factory is entering its second year of operations and has the following cost information for the stirring department: costs added to complete beginning inventory, $780; costs already in beginning inventory, $320; costs for new batches started, $5,677; and costs of incomplete inventory at the end of the period, $443. If this factory uses the First-In, First-Out (FIFO) method, then what is the total cost that they will include in their journal entry as it moves to the next department?

Question

Quizplus · Accepted Answer

This question asks which costs will be included in the amount that is completed and removed in order to move to the next department using the FIFO method. Both costs in the beginning inventory should be included: $780 + $320 = $1,100. To determine the amount that was both completed and removed, determine how much was completed (Units Started - Units in Ending Inventory): $5,677 - $443 = $5,234. To calculate the amount that will be moved to the next department, combine costs of beginning inventory plus costs of units started and completed, ending inventory will not be factored in again: $1,100 + $5,234 = $6,334

A Factory Is Entering Its Second Year of Operations and Has