Question: 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,

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

40, 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, 250 .

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

14, 000

units in ending work in process, or

25

percent complete.

Assume that the FIFO method is used.

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

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