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FIFO Method, Physical Flow, Equivalent Units, Unit Costs, Cost Assignment

Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes through three processes: Cutting, Welding, and Painting. In September, the Cutting Department of the Tulsa, Oklahoma, plant reported the following data:

In Cutting, all direct materials are added at the beginning of the process.

Beginning work in process consisted of 41,000 units, 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, $1,215,000; direct labor, $222,000; and applied overhead, $150,000.

Costs added to production during the month were direct materials, $2,575,000; direct labor, $3,471,050. Overhead was assigned using the following information:

Activity		Rate		Actual Driver Usage
Inspection		$150 per inspection hour		4,000 inspection hours
Maintenance		$750 per maintenance hour		1,600 maintenance hours
Receiving		$300 per receiving order		2,000 receiving orders

At the end of the month, 121,000 units were transferred out to Welding, leaving 13,000 units in ending work in process, or 25 percent complete.

Assume that the FIFO method is used.

Required:

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1. Prepare a physical flow schedule.

blank Swasey Fabrication, Inc. Physical Flow Schedule

Units to account for:	blank
Units, beginning work in processUnits completed and transferred outUnits, ending work in processUnits, beginning work in process	Units, beginning work in process
Units completed and transferred outUnits, ending work in processUnits started (transferred in)Units started (transferred in)	Units started (transferred in)
Total units to account for	fill in the blank d1689af18ff8fcb_5
Units accounted for:	blank
Units, beginning work in processUnits completed and transferred outUnits started (transferred in)Units completed and transferred out	Units completed and transferred out Incorrect
Units, beginning work in processUnits, ending work in processUnits started (transferred in)Units, ending work in process	Units, ending work in process
Total units accounted for	fill in the blank d1689af18ff8fcb_10

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1. A physical flow schedule shows the units to account for and what happened to them.

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2. Calculate equivalent units of production for direct materials and conversion costs.

	Equivalent Units
Direct Materials	fill in the blank ba480efcb004f83_1
Conversion Costs	fill in the blank ba480efcb004f83_2

3. Compute unit cost. Round unit costs & final answer to three decimal places. $fill in the blank ba480efcb004f83_3 per unit

4. Calculate the cost of goods transferred to Welding at the end of the month. In your calculations, round unit costs to three decimal places. Round your final answer to the nearest dollar. $fill in the blank ba480efcb004f83_4

Calculate the cost of ending inventory. In your calculations, round unit costs to three decimal places. Round your final answer to the nearest dollar. $fill in the blank ba480efcb004f83_5

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2. The equivalent units schedule measures the output of the period. A fully completed unit is counted as a unit of output. Output for a unit in ending work in process is counted by its degree of completion.

3. Using FIFO, cost per equivalent unit is calculated using only current costs. Determine by dividing current costs for direct materials and conversion costs by the associated equivalent units. Add all unit costs to get the total cost per equivalent unit.

4. The cost of goods (services) transferred out is the unit cost multiplied by the units completed. The cost of EWIP is the unit cost multiplied by the equivalent units found in EWIP. The partially completed units and all their associated costs are transferred to the next process (department) by debiting the WIP account of the process (department) receiving the unit and crediting the WIP account of the transferring process (department).

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Partially correct