Equivalent Units and Product Cost Report$$FIFO Method

In its first month's operations, Allred Company's Department $1$ incurred charges of $$70,000$ for direct materials $(10,000$ units$),$ $$24,800$ for direct labor, and $$29,800$ for manufacturing overhead. At month$-$end, $8,800$ units had been finished and transferred out. The remaining units were finished with respect to material but only $25\%$ complete with respect to conversion costs.

Assuming Allred uses the FIFO method and that materials are added at the beginning of the process and conversion costs occur evenly, compute the following:

The equivalent units for material and conversion.

The cost per equivalent unit for material and conversion.

The total cost assigned to the units transferred out.

The total cost assigned to the ending inventory.

Prove that your solutions to requirements $($c$)$ and $($d$)$ sum to the total costs to be accounted for.

Allred Company, Department $1$

Equivalent Units Calculations

Equivalent Units

$\%$ in

January Direct

Materials $\%$ in

January Conversion

Costs

Complete$/$Transferred

Beginning inventory

Started & completed

Ending inventory

Total a$.$ a$.$

Product Cost Report

Direct

Materials Conversion

Costs

Beginning Inventory

Current

Total Costs to Account For

$-$: Total Equivalent Units

Average cost $/$ Equivalent unit b$.$ b$.$

Beginning inventory

Costs incurred in Month $0$

Costs incurred in Month $1$

Started and finished

Cost of Goods Manufactured c$.$

Ending Inventory:

Direct Materials

Conversion costs

Cost of Ending Inventory d$.$

Total Costs Allocated e$.$