Name : Nadiatul Qalbi Amalia Rizqi
Student ID : 041911333077
Process Costing – FIFO
Units Completed and transferred out: Total units finished from beginning work in
process + units started and completed this period
Equivalent Units based on: Units from Beg. Work in Process completed + units
started and completed + units in Ending Work in Process
Cost per Equivalent Unit based on: Costs added this period only
Assign costs using: Beg. Work in Process Costs + Equivalent Units x cost per
equivalent unit for units finished from Beg. Work In Process, Units started and
completed and units in End. Work In Process
FIFO Process Costing consists of 5 steps :
1. Physical Flow of Units
2. Equivalent Units
3. Cost per Equivalent Unit
4. Assign Costs to Units Completed and Ending Work in Process Inventory
5. Reconcile Costs
Physical Flow of units :
Units in Beginning WIP + Units started this period = Total Units
Units completed and trasferred : Beg. WIP units completed + units stated and
completed this period = Units completed and trasferred + Units in end WIP = Total
Units
Equivalent Units :
1. Units from beginning work in process: you want to complete this units, so
how much MORE effort will be needed to finish these units. You will calculate
this as beginning work in process units x (100% – given % complete) to
calculate the amount of additional work necessary to make the unit 100%
complete.
2. Units started and completed this period: take the units x 100% complete since
they were started and completed they have received all of their materials, labor
and overhead and will not receive any more since they are finished.
3. Units in Ending work in process: just like with the weighted average method,
we will take the ending work in process units x a given % complete.
Cost per Equivalent Unit :
Current costs added this perios / total equivalent units = cost per equivalent units
Assign Costs :
1. Costs from beginning work in process: these were the costs we started the
period with or the unfinished items from the previous period (no calculation
required — just bring over the costs from beginning work in process).
Remember, under FIFO, these are finished first so their costs must be passed
along to completed units.
2. Costs to complete beginning work in process: you will take the Equivalent
units calculated for completing beginning work in process x the cost per
equivalent unit. You will do this for materials, labor and overhead (or for
conversion costs which is the both direct labor and overhead).
3. Costs of units started and completed: you will take the equivalent units
calculated for units started and completed x the cost per equivalent unit for
materials, labor and overhead (or conversion).
4. The sum of these 3 will be the cost of units completed and transferred which is
also known as cost of goods manufactured. This amount is transferred to the
next department or to finished goods and out of work in process for the units
completed this period.
5. Cost of units remaining in ending work in process: you will take the ending
work in process equivalent units x the cost per equivalent unit for materials,
labor and overhead (or conversion) just as we did under the weighed average
method. This amount rolls over to be the next period’s beginning work in
process inventory.
Cost Reconciliation :