Bufford Corporation Uses the FIFO Method in Its Process Costing

question 36

Essay

Bufford Corporation uses the FIFO method in its process costing system.The following data concern the company's Assembly Department for the month of September. $\begin{array}{llcc} \text { Cost in beginning work in process inventory ....... } &\$4,980\\ \text { Units started and completed this month.............. } &3,490\\\end{array}$

$\begin{array} { l r r } & \text { Materials } & \text { Conversion } \\\text { Cost per equivalent unit ................................... } & \$ 22.50 & \$ 9.80 \\\text { Equivalent units required to complete the units in } & \\\text { beginning work in process inventory ......................}&170&100\\ \text { Equivalent units in ending work in process inventory.. } & 350 & 154\end{array}$ Required:
Determine the cost of ending work in process inventory and the cost of units transferred out of the department during September using the FIFO method.

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Definitions:

Opportunity Cost

Opportunity cost represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Marginal Product

Describes the additional output that is produced by using one more unit of a factor of production, holding all other factors constant.

Marginal Cost

The supplementary cost that arises when one additional unit of a product or service is produced.