Easy IncUses the FIFO Method in Its Process Costing System

question 78

Essay

Easy Inc.uses the FIFO method in its process costing system.The following data concern the operations of the company's first processing department for a recent month. Required:
Using the FIFO method:
a.Determine the equivalent units of production for materials and conversion costs.
b.Determine the cost per equivalent unit for materials and conversion costs.
c.Determine the cost of ending work in process inventory.
d.Determine the cost of units transferred out of the department during the month.

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Definitions:

Direct Labour Hours

The total time workers spend producing goods or delivering services, directly tied to the production output.

Manufacturing Overhead

The indirect costs associated with manufacturing, not directly tied to a specific product, such as maintenance, utilities, and salaries of supervisors.

Overapplied Overhead

A situation where the allocated manufacturing overhead cost is more than the actual overhead cost incurred.

Underapplied Overhead

Occurs when the allocated overhead costs are less than the actual overhead costs incurred.