{"id":929,"date":"2021-04-01T18:11:00","date_gmt":"2021-04-01T18:11:00","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/?post_type=chapter&#038;p=929"},"modified":"2021-08-15T20:26:13","modified_gmt":"2021-08-15T20:26:13","slug":"production-report-fifo","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/chapter\/production-report-fifo\/","title":{"raw":"Production Report - FIFO","rendered":"Production Report &#8211; FIFO"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Prepare a production cost report using the FIFO method<\/li>\r\n<\/ul>\r\n<\/div>\r\n<img class=\"size-medium wp-image-1715 alignleft\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/04\/14231819\/nathan-dumlao-m-dhIU1gJHM-unsplash-200x300.jpg\" alt=\"pie crust\" width=\"200\" height=\"300\" \/>Let\u2019s take a look at Dad\u2019s Perfect Pies Production Report for February based on the following results:\r\n\r\nThe 750 shells in production at the end of January were 60% complete as to conversion costs and 100% complete as to direct materials, so in February they will need 40% more conversion but 0% more direct materials.\r\n\r\nThe mixing department started another 3,250 shells during February, and at the end of the month, there were still 1,000 shells being mixed and prepped for baking. They were only 25% complete as to conversion but 100% of the direct materials had been added (because they are added at the beginning of the process).\r\n\r\nAccording to the accounting records, direct materials transferred to the mixing department were costed at $3,575 and direct labor and factory overhead were $3,640.\r\n\r\nUnder the weighted average method, costs transferred in from last month are added to this month\u2019s costs and distributed across all units. This is the simplest way to account for beginning inventory costs, but not always the most accurate. For example, if costs are going up, the cost of those 750 pie shells in beginning work in process inventory would be less than the cost of the 1,000 pie shells in ending inventory.\r\n\r\nThe First-in, First-out method of allocating costs assumes that the units in beginning work-in-process inventory are finished first, then transferred out, and then all the batches during the month are finished and transferred out, and then only the most recent costs are assigned to ending inventory.\r\n\r\nTherefore, FIFO creates three groups of units to be accounted for:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Beginning work-in-process<\/strong> - Units started in the prior month, completed in the current month<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Started and completed<\/strong> - Units started and completed in the current month<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Ending work-in-process<\/strong> - Units started in the current month not yet completed<\/li>\r\n<\/ul>\r\nTherefore, there are a few more steps in creating the Production Cost Report. However, the first step is the same as with the weighted average method.\r\n<h3>Step 1 - Calculate units to account for<\/h3>\r\nEstablish the total inventory in production by adding units started into production to beginning work in process (what was left only partially finished at the end of the prior month). The company had 750 shells in process at the close of business on January 31. The beginning inventory of 750 plus the 3,250 pie shells worth of materials placed into production during the month gives us 4,000 total units to account for.\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\r\n<th class=\"r\" scope=\"col\">Physical Units<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"2\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units to account for:<\/strong><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\r\n<td class=\"r\">750<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Started in production<\/td>\r\n<td class=\"r\">3,250<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units to account for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n<h3>Step 2 - Calculate units accounted for<\/h3>\r\nThis is where equivalent units are different than the normal formula, but only for beginning inventory.\r\n\r\nUnder the FIFO method, we assume beginning inventory is finished first, before anything else is started. Last month (January) all of the direct materials were added and accounted for, so this month, there are no more direct materials to add. The EUs for this month for direct materials for beginning inventory is zero. For conversion costs, last month we added 60% of the costs to the work-in-process, and for February, we will use 40% as our factor to convert the physical units to Equivalent Units. 60% finished last month = 40% left to do this month.\r\n\r\nFor beginning inventory, the formula for EUs is:\r\n<p style=\"padding-left: 30px;\">Actual Units * (1 - % complete)<\/p>\r\n<p style=\"padding-left: 30px;\">750 units * (1 - 0.60) = 750 * 0.40 = 300 EUs<\/p>\r\nThis is important and an easy place to slip up. EUs for beginning inventory is the complement of last month\u2019s ending inventory because now you are finishing them up. If the beginning work-in-process inventory is 10% done, then the factor to use to calculate EUs to finish it up this month is 90%.\r\n\r\nUnits started during the period, finished, and then transferred out are 100% complete, so the Equivalent Units and the actual physical units are the same.\r\n\r\nUnfinished units (work-in-process) in this department have to be converted to Equivalent Units. In this case, since materials are all added at the beginning, the Equivalent Units for Direct Materials is 100% of the actual units, but the Equivalent Units for the Conversion Costs allocation is 25% of actual units or 250 EUs.\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">Equivalent Units<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>UNITS<\/td>\r\n<td class=\"r\">Physical Units<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\r\n<td class=\"r\">750<\/td>\r\n<td class=\"r\">0<\/td>\r\n<td class=\"r\">300<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Started and completed<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units transferred to baking<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>3,000<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,250<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,550<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\r\n<td class=\"r\">1,000<\/td>\r\n<td class=\"r\">1,000<\/td>\r\n<td class=\"r\">250<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units accounted for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,250<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,800<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n\r\nWe started with 750 units that were 100% complete as to materials and 60% processed, so the beginning work-in-process EUs for direct materials is 0% of 750 and for conversion costs is 40% of 750 which is 300.\r\n\r\nWe have 4,000 total units for which to account, with 750 in process at the beginning of the month, and the last batch that is still in process at the end of the month will be 1,000 shells once it is done. On the last day of February, it was only 25% through the process, meaning that the EUs for ending inventory for direct materials was 1,000 units and for conversion costs was 25% of 1,000 units which is 250 EUs.\r\n\r\nBecause we started with 750 shells we finished and transferred out, and we started another 3,250 into the process and ended with 1,000 still in the mixing department, we see that we transferred out 3,000 shells to the baking\/packaging department. With 750 started in January, the other 2,250 were started and completed in February.\r\n<h3>Step 3 - Divide costs by equivalent units<\/h3>\r\nFrom the accounting records, we see that total direct materials transferred to the mixing department in February were $3,575 and that direct labor and manufacturing overhead totaled $3,640.\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\r\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\r\n<th class=\"r\" scope=\"col\">Converion Costs<\/th>\r\n<th class=\"r\" scope=\"col\">Total Costs<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs to account for:<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Beginning work-in-process<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 750<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 540<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 1,290<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Costs added during the period<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 3,575<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 3,640<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 7,215<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total costs to account for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 4,325<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 4,180<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 8,505<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n\r\nIn the weighted average method, we divided total costs by total Equivalent Units, but here is where the FIFO method is significantly different.\r\n\r\nBecause we calculated EUs based on completed units, including EUs that represent the effort it took to complete the beginning inventory, we divide ONLY costs added during the period by our Equivalent Units.\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\r\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\r\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td>Costs added during current period<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 3,575<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 3,640<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Divided by: Total EUP<\/td>\r\n<td class=\"r\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3,250<\/td>\r\n<td class=\"r\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2,800<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost per equivalent unit<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 1.10<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 1.30<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n<h3>Step 4 - Allocate costs based on equivalent units<\/h3>\r\nRefer to step 2 for our calculator of EUs:\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">Equivalent Units<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>UNITS<\/td>\r\n<td class=\"r\">Physical Units<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\r\n<td class=\"r\">750<\/td>\r\n<td class=\"r\">0<\/td>\r\n<td class=\"r\">300<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Started and completed<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units transferred to baking<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>3,000<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,250<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,550<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\r\n<td class=\"r\">1,000<\/td>\r\n<td class=\"r\">1,000<\/td>\r\n<td class=\"r\">250<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units accounted for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,250<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,800<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n\r\nMultiply the cost per equivalent unit by the number of equivalent units for each category of units accounted for.\r\n<ol>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Costs for beginning work-in-process come from the prior Production Report\u2019s ending work-in-process<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">The cost to complete work-in-process is the EUs calculated in step 2 * the cost per EU from step 3<\/li>\r\n<\/ol>\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\r\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\r\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td>Equivalent units to complete beginning work-in-process<\/td>\r\n<td class=\"r\">0<\/td>\r\n<td class=\"r\">300<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost per equivalent unit<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1.10<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1.30<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost allocated to completed units<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0-<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0390<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\r\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\r\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\r\n<th class=\"r\" scope=\"col\">Total Costs<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs accounted for:<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Beginning work-in-process (1)<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 750<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0540<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 1,290<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Costs to complete (2)<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 -<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0390<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0390<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost of work-in-process completed<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 750<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0930<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 1,680<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Started and completed (3)<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 2,475<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 2,925<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 5,400<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Transferred to baking\/packaging<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 3,225<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 3,855<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 7,080<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Ending work-in-process<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1,100<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0325<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 1,425<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total costs accounted for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 4,325<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0\u00a0 4,180<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 8,505<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n<p style=\"padding-left: 30px;\">3. Work started and completed during the period = EUs * cost per EU<\/p>\r\n\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\r\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\r\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td>Equivalent units to complete beginning work-in-process<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost per equivalent unit<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1.10<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 1.30<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost allocated to completed units<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a02,475<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a02,925<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n<p style=\"padding-left: 30px;\">4. Costs allocated to ending work-in-process = EUs * cost per EU<\/p>\r\n\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\r\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\r\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td>Equivalent units to complete beginning work-in-process<\/td>\r\n<td class=\"r\">1,000<\/td>\r\n<td class=\"r\">250<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost per equivalent unit<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1.10<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a01.30<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost allocated to completed units<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a01,100<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0\u00a0325<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n<h3>Step 5 - Complete the production report<\/h3>\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\"><caption>Dad's Perfect Pies\r\nProduction Cost Report - Mixing Department - FIFO\r\nMonth Ended February 28<\/caption>\r\n<tbody>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td>Equivalent Units<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>UNITS<\/td>\r\n<td class=\"r\">Physical Units<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units to account for:<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Beginning work-in-process<\/td>\r\n<td class=\"r\">750<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Started in production<\/td>\r\n<td class=\"r\">3,250<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units to account for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Beginning work-in-process<\/td>\r\n<td class=\"r\">750<\/td>\r\n<td class=\"r\">0<\/td>\r\n<td class=\"r\">300<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Started and completed<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<td class=\"r\">2,250<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units transferred to baking<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>3,000<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,250<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,550<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Ending work-in-process<\/td>\r\n<td class=\"r\">1,000<\/td>\r\n<td class=\"r\">1,000<\/td>\r\n<td class=\"r\">250<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total units accounted for<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,250<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,800<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>COSTS<\/td>\r\n<td><\/td>\r\n<td class=\"r\">Direct Materials<\/td>\r\n<td class=\"r\">Conversion Costs<\/td>\r\n<td class=\"r\">Total Costs<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs to account for:<\/strong><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Beginning work-in-process<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0750<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0540<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 1,290<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Costs added during the period<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 3,575<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 3,640<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 7,215<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total costs to account for<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 4,325<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 4,180<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 8,505<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Costs added during current period<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 3,575<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 3,640<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Divided by: Total EUP<\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3,250<\/td>\r\n<td class=\"r\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2,800<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost per equivalent unit<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ 1.10<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ 1.30<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs accounted for:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Beginning work-in-process<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 750<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 540<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 1,290<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Costs to complete<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 -<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 390<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0390<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost of work-in-process completed<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0750<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 930<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a01,680<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Started and completed<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 2,475<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0\u00a02,925<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a05,400<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Transferred to baking\/packaging<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 3,225<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0\u00a03,855<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a07,080<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Ending work-in-process<\/td>\r\n<td><\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 1,100<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0325<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a01,425<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total costs accounted for<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a04,325<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0\u00a04,180<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a08,505<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;\r\n\r\nIn circumstances where the product is flowing in batches like this, FIFO gives us a more accurate per unit cost for both beginning and ending work-in-process inventory.\r\n\r\nNow, check your understanding of the FIFO method of computing ending and work-in-process inventory using process costing.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\n[ohm_question hide_question_numbers=1]219052[\/ohm_question]\r\n\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Prepare a production cost report using the FIFO method<\/li>\n<\/ul>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-1715 alignleft\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/04\/14231819\/nathan-dumlao-m-dhIU1gJHM-unsplash-200x300.jpg\" alt=\"pie crust\" width=\"200\" height=\"300\" \/>Let\u2019s take a look at Dad\u2019s Perfect Pies Production Report for February based on the following results:<\/p>\n<p>The 750 shells in production at the end of January were 60% complete as to conversion costs and 100% complete as to direct materials, so in February they will need 40% more conversion but 0% more direct materials.<\/p>\n<p>The mixing department started another 3,250 shells during February, and at the end of the month, there were still 1,000 shells being mixed and prepped for baking. They were only 25% complete as to conversion but 100% of the direct materials had been added (because they are added at the beginning of the process).<\/p>\n<p>According to the accounting records, direct materials transferred to the mixing department were costed at $3,575 and direct labor and factory overhead were $3,640.<\/p>\n<p>Under the weighted average method, costs transferred in from last month are added to this month\u2019s costs and distributed across all units. This is the simplest way to account for beginning inventory costs, but not always the most accurate. For example, if costs are going up, the cost of those 750 pie shells in beginning work in process inventory would be less than the cost of the 1,000 pie shells in ending inventory.<\/p>\n<p>The First-in, First-out method of allocating costs assumes that the units in beginning work-in-process inventory are finished first, then transferred out, and then all the batches during the month are finished and transferred out, and then only the most recent costs are assigned to ending inventory.<\/p>\n<p>Therefore, FIFO creates three groups of units to be accounted for:<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Beginning work-in-process<\/strong> &#8211; Units started in the prior month, completed in the current month<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Started and completed<\/strong> &#8211; Units started and completed in the current month<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Ending work-in-process<\/strong> &#8211; Units started in the current month not yet completed<\/li>\n<\/ul>\n<p>Therefore, there are a few more steps in creating the Production Cost Report. However, the first step is the same as with the weighted average method.<\/p>\n<h3>Step 1 &#8211; Calculate units to account for<\/h3>\n<p>Establish the total inventory in production by adding units started into production to beginning work in process (what was left only partially finished at the end of the prior month). The company had 750 shells in process at the close of business on January 31. The beginning inventory of 750 plus the 3,250 pie shells worth of materials placed into production during the month gives us 4,000 total units to account for.<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\n<th class=\"r\" scope=\"col\">Physical Units<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"2\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units to account for:<\/strong><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\n<td class=\"r\">750<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Started in production<\/td>\n<td class=\"r\">3,250<\/td>\n<\/tr>\n<tr>\n<td>Total units to account for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<h3>Step 2 &#8211; Calculate units accounted for<\/h3>\n<p>This is where equivalent units are different than the normal formula, but only for beginning inventory.<\/p>\n<p>Under the FIFO method, we assume beginning inventory is finished first, before anything else is started. Last month (January) all of the direct materials were added and accounted for, so this month, there are no more direct materials to add. The EUs for this month for direct materials for beginning inventory is zero. For conversion costs, last month we added 60% of the costs to the work-in-process, and for February, we will use 40% as our factor to convert the physical units to Equivalent Units. 60% finished last month = 40% left to do this month.<\/p>\n<p>For beginning inventory, the formula for EUs is:<\/p>\n<p style=\"padding-left: 30px;\">Actual Units * (1 &#8211; % complete)<\/p>\n<p style=\"padding-left: 30px;\">750 units * (1 &#8211; 0.60) = 750 * 0.40 = 300 EUs<\/p>\n<p>This is important and an easy place to slip up. EUs for beginning inventory is the complement of last month\u2019s ending inventory because now you are finishing them up. If the beginning work-in-process inventory is 10% done, then the factor to use to calculate EUs to finish it up this month is 90%.<\/p>\n<p>Units started during the period, finished, and then transferred out are 100% complete, so the Equivalent Units and the actual physical units are the same.<\/p>\n<p>Unfinished units (work-in-process) in this department have to be converted to Equivalent Units. In this case, since materials are all added at the beginning, the Equivalent Units for Direct Materials is 100% of the actual units, but the Equivalent Units for the Conversion Costs allocation is 25% of actual units or 250 EUs.<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">Equivalent Units<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>UNITS<\/td>\n<td class=\"r\">Physical Units<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\n<\/tr>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\n<td class=\"r\">750<\/td>\n<td class=\"r\">0<\/td>\n<td class=\"r\">300<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Started and completed<\/td>\n<td class=\"r\">2,250<\/td>\n<td class=\"r\">2,250<\/td>\n<td class=\"r\">2,250<\/td>\n<\/tr>\n<tr>\n<td>Total units transferred to baking<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>3,000<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,250<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,550<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\n<td class=\"r\">1,000<\/td>\n<td class=\"r\">1,000<\/td>\n<td class=\"r\">250<\/td>\n<\/tr>\n<tr>\n<td>Total units accounted for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,250<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,800<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<p>We started with 750 units that were 100% complete as to materials and 60% processed, so the beginning work-in-process EUs for direct materials is 0% of 750 and for conversion costs is 40% of 750 which is 300.<\/p>\n<p>We have 4,000 total units for which to account, with 750 in process at the beginning of the month, and the last batch that is still in process at the end of the month will be 1,000 shells once it is done. On the last day of February, it was only 25% through the process, meaning that the EUs for ending inventory for direct materials was 1,000 units and for conversion costs was 25% of 1,000 units which is 250 EUs.<\/p>\n<p>Because we started with 750 shells we finished and transferred out, and we started another 3,250 into the process and ended with 1,000 still in the mixing department, we see that we transferred out 3,000 shells to the baking\/packaging department. With 750 started in January, the other 2,250 were started and completed in February.<\/p>\n<h3>Step 3 &#8211; Divide costs by equivalent units<\/h3>\n<p>From the accounting records, we see that total direct materials transferred to the mixing department in February were $3,575 and that direct labor and manufacturing overhead totaled $3,640.<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\n<th class=\"r\" scope=\"col\">Converion Costs<\/th>\n<th class=\"r\" scope=\"col\">Total Costs<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs to account for:<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<\/tr>\n<tr>\n<td>Beginning work-in-process<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 750<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 540<\/td>\n<td class=\"r\">$\u00a0 \u00a0 1,290<\/td>\n<\/tr>\n<tr>\n<td>Costs added during the period<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 3,575<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 3,640<\/td>\n<td class=\"r\">$\u00a0 \u00a0 7,215<\/td>\n<\/tr>\n<tr>\n<td>Total costs to account for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 4,325<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 4,180<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 8,505<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<p>In the weighted average method, we divided total costs by total Equivalent Units, but here is where the FIFO method is significantly different.<\/p>\n<p>Because we calculated EUs based on completed units, including EUs that represent the effort it took to complete the beginning inventory, we divide ONLY costs added during the period by our Equivalent Units.<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td>Costs added during current period<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 3,575<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 3,640<\/td>\n<\/tr>\n<tr>\n<td>Divided by: Total EUP<\/td>\n<td class=\"r\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3,250<\/td>\n<td class=\"r\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2,800<\/td>\n<\/tr>\n<tr>\n<td>Cost per equivalent unit<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 1.10<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 1.30<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<h3>Step 4 &#8211; Allocate costs based on equivalent units<\/h3>\n<p>Refer to step 2 for our calculator of EUs:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">Equivalent Units<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>UNITS<\/td>\n<td class=\"r\">Physical Units<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\n<\/tr>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Beginning work-in-process<\/td>\n<td class=\"r\">750<\/td>\n<td class=\"r\">0<\/td>\n<td class=\"r\">300<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Started and completed<\/td>\n<td class=\"r\">2,250<\/td>\n<td class=\"r\">2,250<\/td>\n<td class=\"r\">2,250<\/td>\n<\/tr>\n<tr>\n<td>Total units transferred to baking<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>3,000<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,250<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,550<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Ending work-in-process<\/td>\n<td class=\"r\">1,000<\/td>\n<td class=\"r\">1,000<\/td>\n<td class=\"r\">250<\/td>\n<\/tr>\n<tr>\n<td>Total units accounted for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,250<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,800<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<p>Multiply the cost per equivalent unit by the number of equivalent units for each category of units accounted for.<\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Costs for beginning work-in-process come from the prior Production Report\u2019s ending work-in-process<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">The cost to complete work-in-process is the EUs calculated in step 2 * the cost per EU from step 3<\/li>\n<\/ol>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td>Equivalent units to complete beginning work-in-process<\/td>\n<td class=\"r\">0<\/td>\n<td class=\"r\">300<\/td>\n<\/tr>\n<tr>\n<td>Cost per equivalent unit<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1.10<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1.30<\/td>\n<\/tr>\n<tr>\n<td>Cost allocated to completed units<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0&#8211;<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0390<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\n<th class=\"r\" scope=\"col\">Total Costs<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs accounted for:<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<\/tr>\n<tr>\n<td>Beginning work-in-process (1)<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 750<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0540<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 1,290<\/td>\n<\/tr>\n<tr>\n<td>Costs to complete (2)<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 &#8211;<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0390<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0390<\/td>\n<\/tr>\n<tr>\n<td>Cost of work-in-process completed<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 750<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0930<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 1,680<\/td>\n<\/tr>\n<tr>\n<td>Started and completed (3)<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 2,475<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 2,925<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 5,400<\/td>\n<\/tr>\n<tr>\n<td>Transferred to baking\/packaging<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 3,225<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 3,855<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 7,080<\/td>\n<\/tr>\n<tr>\n<td>Ending work-in-process<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1,100<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0325<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 1,425<\/td>\n<\/tr>\n<tr>\n<td>Total costs accounted for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 4,325<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0\u00a0 4,180<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 8,505<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<p style=\"padding-left: 30px;\">3. Work started and completed during the period = EUs * cost per EU<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td>Equivalent units to complete beginning work-in-process<\/td>\n<td class=\"r\">2,250<\/td>\n<td class=\"r\">2,250<\/td>\n<\/tr>\n<tr>\n<td>Cost per equivalent unit<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1.10<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 1.30<\/td>\n<\/tr>\n<tr>\n<td>Cost allocated to completed units<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a02,475<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a02,925<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<p style=\"padding-left: 30px;\">4. Costs allocated to ending work-in-process = EUs * cost per EU<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><span class=\"u-sr-only\">Description<\/span><\/th>\n<th class=\"r\" scope=\"col\">Direct Materials<\/th>\n<th class=\"r\" scope=\"col\">Conversion Costs<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td>Equivalent units to complete beginning work-in-process<\/td>\n<td class=\"r\">1,000<\/td>\n<td class=\"r\">250<\/td>\n<\/tr>\n<tr>\n<td>Cost per equivalent unit<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 1.10<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a01.30<\/td>\n<\/tr>\n<tr>\n<td>Cost allocated to completed units<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a01,100<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0\u00a0325<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<h3>Step 5 &#8211; Complete the production report<\/h3>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<caption>Dad&#8217;s Perfect Pies<br \/>\nProduction Cost Report &#8211; Mixing Department &#8211; FIFO<br \/>\nMonth Ended February 28<\/caption>\n<tbody>\n<tr>\n<td><\/td>\n<td><\/td>\n<td>Equivalent Units<\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>UNITS<\/td>\n<td class=\"r\">Physical Units<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Direct Materials<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>Conversion Costs<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units to account for:<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Beginning work-in-process<\/td>\n<td class=\"r\">750<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Started in production<\/td>\n<td class=\"r\">3,250<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Total units to account for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Units accounted for:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Beginning work-in-process<\/td>\n<td class=\"r\">750<\/td>\n<td class=\"r\">0<\/td>\n<td class=\"r\">300<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Started and completed<\/td>\n<td class=\"r\">2,250<\/td>\n<td class=\"r\">2,250<\/td>\n<td class=\"r\">2,250<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Total units transferred to baking<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>3,000<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,250<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>2,550<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Ending work-in-process<\/td>\n<td class=\"r\">1,000<\/td>\n<td class=\"r\">1,000<\/td>\n<td class=\"r\">250<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Total units accounted for<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>4,000<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>3,250<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,800<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>COSTS<\/td>\n<td><\/td>\n<td class=\"r\">Direct Materials<\/td>\n<td class=\"r\">Conversion Costs<\/td>\n<td class=\"r\">Total Costs<\/td>\n<\/tr>\n<tr>\n<td colspan=\"1\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs to account for:<\/strong><\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<\/tr>\n<tr>\n<td>Beginning work-in-process<\/td>\n<td><\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0750<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0540<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 1,290<\/td>\n<\/tr>\n<tr>\n<td>Costs added during the period<\/td>\n<td><\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 3,575<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 3,640<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 7,215<\/td>\n<\/tr>\n<tr>\n<td>Total costs to account for<\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 4,325<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 4,180<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 8,505<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Costs added during current period<\/td>\n<td><\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 3,575<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 3,640<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Divided by: Total EUP<\/td>\n<td><\/td>\n<td class=\"r\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 3,250<\/td>\n<td class=\"r\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2,800<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Cost per equivalent unit<\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ 1.10<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ 1.30<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Costs accounted for:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Beginning work-in-process<\/td>\n<td><\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 750<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 540<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 1,290<\/td>\n<\/tr>\n<tr>\n<td>Costs to complete<\/td>\n<td><\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 &#8211;<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 390<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0390<\/td>\n<\/tr>\n<tr>\n<td>Cost of work-in-process completed<\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0750<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 930<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a01,680<\/td>\n<\/tr>\n<tr>\n<td>Started and completed<\/td>\n<td><\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 2,475<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0\u00a02,925<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a05,400<\/td>\n<\/tr>\n<tr>\n<td>Transferred to baking\/packaging<\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 3,225<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0\u00a03,855<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a07,080<\/td>\n<\/tr>\n<tr>\n<td>Ending work-in-process<\/td>\n<td><\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 1,100<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0325<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a01,425<\/td>\n<\/tr>\n<tr>\n<td>Total costs accounted for<\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a04,325<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0\u00a04,180<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a08,505<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<p>In circumstances where the product is flowing in batches like this, FIFO gives us a more accurate per unit cost for both beginning and ending work-in-process inventory.<\/p>\n<p>Now, check your understanding of the FIFO method of computing ending and work-in-process inventory using process costing.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p><iframe loading=\"lazy\" id=\"ohm219052\" class=\"resizable\" src=\"https:\/\/ohm.lumenlearning.com\/multiembedq.php?id=219052&theme=oea&iframe_resize_id=ohm219052\" width=\"100%\" height=\"150\"><\/iframe><\/p>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-929\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Introduction to Accumulating and Assigning Costs. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Pie crust. <strong>Provided by<\/strong>: Unsplash. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/unsplash.com\/photos\/m-dhIU1gJHM\">https:\/\/unsplash.com\/photos\/m-dhIU1gJHM<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/about\/cc0\">CC0: No Rights Reserved<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":364389,"menu_order":9,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Introduction to Accumulating and Assigning Costs\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Pie crust\",\"author\":\"\",\"organization\":\"Unsplash\",\"url\":\"https:\/\/unsplash.com\/photos\/m-dhIU1gJHM\",\"project\":\"\",\"license\":\"cc0\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-929","chapter","type-chapter","status-publish","hentry"],"part":31,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/929","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/wp\/v2\/users\/364389"}],"version-history":[{"count":9,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/929\/revisions"}],"predecessor-version":[{"id":2651,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/929\/revisions\/2651"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/parts\/31"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/929\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/wp\/v2\/media?parent=929"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=929"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/wp\/v2\/contributor?post=929"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/wp-json\/wp\/v2\/license?post=929"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}