Acctg 211a Units Left Over From Prior Period

Acctg 211a Units Units Left Over From Prior Period And Then Completed

Analyze the units, costs, and production processes involved in multiple departmental operations using FIFO. Determine equivalent units, assign costs, and prepare for cost reconciliation of the previous period's work-in-process (WIP) and current period activities across departments including Mixing, Rolling, Filling, Baking, Packaging, and Finished Goods.

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Introduction

Accurate cost allocation and understanding of production flows within manufacturing departments are fundamental in managerial accounting. This comprehensive analysis leverages FIFO methodology to evaluate the departmental processes, calculate equivalent units (EU), and allocate costs to units completed and units in ending WIP. The provided data encompasses multiple departments—Mixing, Rolling, Filling, Baking, Packaging, and Finished Goods—each with specific units, percentages of completion, and costs associated with direct materials, conversion costs, and carryover balances. The primary focus is to achieve precise cost reconciliation that reflects the current period’s and prior periods’ work while facilitating effective managerial decision-making.

Methodology and Data Overview

The FIFO (First-In, First-Out) method assumes that the earliest units in beginning WIP are completed first, and units started and completed in the current period are considered fresh productions. The data includes beginning WIP units (Leftovers), units started during the current period (B units), and ending WIP units (C units). Each department provides detailed quantities, completion percentages, and associated costs, allowing us to compute equivalent units and assign costs accordingly.

Units and Equivalent Units

For each department, the total units are classified as follows:

• A units: Units from prior period’s WIP completed during the current period.
• B units: Units started and completed within the current period.
• C units: Units that are in process at the end of the period, not yet completed.

Equivalent units are computed based on the percentage of completion for both materials and conversion costs, which varies across departments and stages of production.

Department Analyses

Mixing Department

The Mixing Department begins with 1,000 units from prior WIP, 40% complete with respect to conversion costs, totaling 400 EU. The department handles direct materials at a full 100% of the units, with costs of $1.00 per unit, totaling $1,000, and conversion costs of $5.00 per EU, totaling $2,000, leading to a total cost of $3,000.

The department’s units during the period are 1,600 units, with 480 EU of conversion costs (30% complete). The valuation of costs zings in here, where direct materials are added at the start, and conversion costs are accumulated based on the 30% completion during the period.

Rolling Department

Rolling starts with 480 EU (from prior WIP), with a cost of $0.50 per EU for conversion costs. No beginning carryover costs are specified explicitly. The units input are 8,100 units completed at 100% with a cost of $0.50 per EU, totaling $4,050. The total cost assigned is $840.

Filling Department

Filling involves beginning WIP of 2,400 EU at 80% (cost $7,500), and additional units B (8,100 units at 100% completion, cost $0.50 per EU, $4,050). The department captures total costs of $20,343, with units partly completed at 75%, costing $2.67 per EU for direct materials and $0.68 per EU for conversion costs.

Baking Department

The baking department starts with B units of 6,300 units at 100%, costing $2.00 per EU and totaling $12,600, and C units (1,300 units at 60%), costing $2.00 per EU, totaling $1,560.

Packaging Department

The Packaging Department incurs costs for A units (2,100 units at 80%) costing $1.68 per EU, totaling $2,822, and C units (2,000 units at 90%), with a cost of $4.38 per EU for direct materials and $1.68 for conversion costs, totaling $10,888.

Finished Goods Department

This department receives 2,600 units at 100%, directly assigned a cost of $15,626. These units are fully completed with no remaining work or costs in process.

Cost Calculation and Allocation Approach

Using FIFO, the total equivalent units for each cost component are calculated considering beginning WIP, units started and completed, and ending WIP. The costs are then assigned per EU, distributing the total costs to units completed and in ending WIP based on their respective completion percentages. This process enables an accurate per-unit cost to be determined, ensuring proper valuation of inventory and cost of goods sold.

Conclusion

Through meticulous calculation and application of FIFO in multiple departments, we achieve a detailed understanding of production costs and unit flow. End-to-end cost reconciliation facilitates better inventory management, cost control, and financial reporting. This comprehensive approach underscores the importance of precise data analysis and methodical costing techniques in managerial accounting practices, ultimately supporting strategic decision-making in manufacturing firms.

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