Two department process costing using FIFO and average costing Hempfield Equipment Company makes lawn sweepers which is one product in its line of garden tools and equipment. The frame and body components of the lawn sweeper are cut and shaped in the Fabricating department. These parts are sent to the Assembly department where they are bolted and welded together and the wheel and brush assemblies, which are purchased parts. The company uses average costing to account for inventory cost flows in the Fabricating department, and FIFO is used in Assembly. Below are December production and cost data for the two process centers.

Fabricating Beginning work in process for December was 1,000 units with all materials and 1/2 complete with respect to conversion. Beginning inventory costs were $11,120 for direct materials and $4,335 for conversion. During December, 6,000 units were started. December material cost in Fabricating was $65,880 and December conversion cost was $49,665. Ending work in process for the month was 1,500 units with all material added and 1/3 conversion. Assembly Beginning inventory consisted of 2,000 units with all material and 60 percent conversion. Costs in beginning inventory were $40,900 for preceding department costs, $34,500 for materials, and $15,120 for conversion. Current month production costs were $89,100 for materials and $77,945 for conversion. There were 700 units in ending inventory with all materials and 50 percent conversion.