Problem: Using the Process Costing FIFO Method; what is the Cost of units transferred out and Costs of ending work-in-process inventory?
LB Home Paint Company produces exterior latex paint, which it sells in one-gallon containers. The company has two processing departments-Base Fab and Finishing. White paint, which is used as a base for all the company's paints, is mixed from raw ingredients in the Base Fab Department. Pigments are then added to the basic white paint, the pigmented paint is squirted under pressure into one-gallon containers, and the containers are labeled and packed for shipping in the Finishing Department.
Information relating to the company's operations for April follows:
Issued raw materials for use in production: Base Fab Department, $851,000; and Finishing Department, $629,000.
Incurred direct labor costs: Base Fab Department, $330,000; and Finishing Department, $270,000.
Applied manufacturing overhead cost: Base Fab Department, $665,000; and Finishing Department, $405,000.
Transferred paint that had been prepared for shipping from the Finishing Department to Finished Goods, $3,200,000.
The following additional information is available regarding production in the Base Fab Department during April:
Production data:
Units (gallons) in process, April 1: materials 100% complete;
Labor and overhead 60% complete 30,000
Units (gallons) started in production during April 420,000
Units (gallons) completed and transferred to Finishing Department 370,000
Units (gallons) in process, April 30: materials 50% complete;
Labor and overhead 25% complete 80,000
Cost data:
Work in process inventory, April 1:
Materials $ 92,000
Labor 21,000
Overhead 37,000
Total cost of work in process inventory $ 150,000
Costs added during April:
Materials $ 851,000
Labor 330,000
Overhead 665,000
Total cost added during April $ 1,846,000