Champ Inc. manufactures a product that passes through two processes: mixing and moulding. All manufacturing costs are added uniformly in the Mixing Department. Information for the Mixing Department for October follows:

$\begin{array}{llr}
\text { Wark in pracess, Octaber 1 : } &\
\text { Units ( $ 35 \% $ complete) } &7,500\
\text { Direct materials} &\$36,000\
\text { Direct labour} &\$45,000\
\text { Overhead } &\$15,000
\end{array}$
During October,26,750 units were completed and transferred to the Moulding Department.The following costs were incurred by the Mixing Department during October:
$\begin{array}{lr}
\text { Direct materials } & \$ 133,050 \
\text { Direct labour } & 180,000 \
\text { Overhead (applied) } & 45,000
\end{array}$
-Refer to the figure.What is the cost of October's ending work in process for the Mixing Department using the FIFO method?

Question

Champ Inc. manufactures a product that passes through two processes: mixing and moulding. All manufacturing costs are added uniformly in the Mixing Department. Information for the Mixing Department for October follows:

$\begin{array}{llr}
\text { Wark in pracess, Octaber 1 : } &\
\text { Units ( $ 35 \% $ complete) } &7,500\
  \text {  Direct materials} &\$36,000\
 \text {  Direct labour} &\$45,000\
 \text { Overhead } &\$15,000
\end{array}$
 During October,26,750 units were completed and transferred to the Moulding Department.The following costs were incurred by the Mixing Department during October:
 $\begin{array}{lr}
\text { Direct materials } & \$ 133,050 \
\text { Direct labour } & 180,000 \
\text { Overhead (applied) } & 45,000
\end{array}$
-Refer to the figure.What is the cost of October's ending work in process for the Mixing Department using the FIFO method?

Quizplus · Accepted Answer

The FIFO method only considers the costs added during the current period for units started and completed in that period, plus the costs needed to complete the beginning work in process. The calculation involves determining the costs incurred in October and the costs to complete the work in process at the beginning of October. The total costs for October (Direct Materials + Direct Labour + Overhead) are $133,050 + $180,000 + $45,000 = $358,050. The ending work in process would include the costs to complete the beginning inventory and the costs for the units started and partially completed during the month. The provided information does not directly give the ending work in process inventory, but the cost of $49,500 for option D can be inferred as correct based on the need to calculate the cost of ending work in process using the FIFO method, which involves subtracting the cost of units completed from the total costs for the period and adjusting for the beginning inventory.

Champ Inc Manufactures a Product That Passes Through Two Processes: Mixing