Question:
Calculation of Unit Costs-Fife Method. The Choate Corporation employs a process cost system to accumulate costs for its Product CHOA. Inventories, costs, and production data for the month of October are shown below.
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Sept. 30
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Oct. 31
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Raw materials
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100,000 lbs.
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80,000 lbs.
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Raw materials cost
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$100,000
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Work in process inventories:
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All materials, 40%, complete as to labor and
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overhead
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20,000 units
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Cost
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$ 84,000
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All materials, 33 1/3% complete as to labor and
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overhead
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30,000 units
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Finished goods inventory
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40,000 units
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24,000 units
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Cost
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$448,000
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Purchases of raw materials
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440,000 lbs. @ $1.10 per lb.
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Transferred to production
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460,000 lbs.
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Production ratio: 2 lbs:l unit of CHOA
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Completed during the month
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220,000 units
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Materials and units are costed on the fifo method
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Direct labor
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$1,198,800
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Factory overhead
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421,800
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Required:
(1) Equivalent production units for materials, labor, and factory overhead.
(2) Unit costs for the three cost elements.
(3) Cost of units transferred to finished goods inventory, using the fifo method,
(4) Cost of ending inventory work in process, in detail.
(5) Number of units sold and the cost of the finished goods inventory on October 31 using the: (a) fifo method; (b) average cost method; (c) cost difference per unit and in total.