Problem - Transferred-in costs, weighted-average and LIFO
Frito-Lay Inc manufactures convenience foods, including potato chips and corn chips. Production of corn chips occurs in four departments: Cleaning, Mixing, Cooking and Drying and Packaging. Consider the Drying and Packaging dept, where direct materials (packaging) is added at the end of the process. Conversion costs are added evenly during the process. Suppose the accounting records of a Frito lay plant provided the following information for corn chips in its Drying and packaging department during a weekly period.
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Physical Units (cases)
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Transferred-in Costs
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Direct Materials
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Conversion Costs
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Beginning work in process, week 37
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1,250
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$29,000
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$0
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$9,060
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Transferred in during week 37 from Cooking department
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5,000
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Completed during week 37
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5,250
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Ending work in process, week 37
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1,000
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Costs added during week 37
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$96,000
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$25,200
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$38,400
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Required -
1. Using the weighted-averages method, summarize the total Drying and Packaging department costs for week 37, and assign total costs to units completed (and transferred out) and to units in ending work in process.
2. Assume that the FIFO method is used for the Drying and Packaging department. Under FIFO, the transferred-in costs for work-in-process beginning inventory in week 37 are $28,920 (instead of $29,000 under the weighted-average method), and the transferred-in costs during the week from the Cooking department are $94,000 (instead of $96,000 under the weighted-average method). All other data are unchanged. Summarize the total Drying and Packaging department costs for week 37 and assign total costs to units completed and transferred out and to units in ending work in process using the FIFO method.