Wize University Managerial Accounting Textbook > Process Costing
FIFO Unit Cost & Cost Reconciliation
Popular Courses
COMM 305
Concordia University
Managerial Accounting
University Study Guides
Managerial Accounting
University Study Guides
COMM 112
Queen's University
RSM222H1
University of Toronto
COMMERCE 2AB3
McMaster University
ACTG 2020
York University
COMM 1102
Dalhousie University
ACC 312
The University of Texas at Austin
ACIS 2116
Virginia Tech
ACG 2071
University of Central Florida
BUS1 21
San José State University
BUS-A 306
Indiana University - Bloomington
ACCT 2102
Temple University
ACCTG-202
San Diego State University
MGMT 20100
Purdue University
ACCTMIS 2300
Ohio State University
ACG 2071
University of Florida
ACCT 210
University of Arizona
BCOR 2303
University of Colorado Boulder
Unit Cost and Cost Reconciliation
Unit Costs
This section of the production cost report estimates an average cost per unit for each cost component (Direct Materials, Conversion Costs and Transferred-in Costs).
Cost Reconciliation
In this last section of the production cost report, we use the equivalent units and the unit costs to determine the total costs that will be transferred out of the work in process account and the account's ending balance.
0:00 / 0:00
Example: Unit Cost and Cost Reconciliation
ABC Inc. has 3 stages in its production process: Process A, Process B and Process C. In Process A, 6,000 units were in work in process on July 31st that were 40% complete. During August, an additional 9,000 units were started. On August 31st, 3,000 units were still in process and 15% complete. Direct materials are added at the beginning of the process.
Prepare the first third and fourth section of the production cost report
Mark Yourself Question
- Grab a piece of paper and try this problem yourself.
- When you're done, check the "I have answered this question" box below.
- View the solution and report whether you got it right or wrong.
Practice: FIFO Method
Wize Company uses a process cost system. The Finishing Department adds materials at the beginning of the process and conversion costs are incurred uniformly throughout the process. Work in process on August 1 was 10,000 units that were 60% complete and Work in Process on August 31 was 9,000 units that were 25% complete. 35,000 units were transferred into the Finishing Department in August. Use the FIFO method.
Beginning WIP Costs
Direct Materials: $90,000
Direct Labour: $55,500
Manufacturing Overhead: $94,520
Transferred in costs: $179,300
Costs Added in August
Direct Materials: $174,600
Direct Labour: $92,700
Manufacturing Overhead: $100,000
Transferred in costs: $700,000
Prepare the production cost report