For Atok Corp, materials are added at the start of the process in Department B. Units received from Department A costs P11.10 while in Department B, unit costs for materials and conversion costs were P1 and P1.22 respectively. The company's quantity data showed that WIP beg, which had a cost of P80,000, had 8,000 units and were ¾ done. During the period, Department A transferred 50,000 units to Department B. At the end of the period, WIP has 10,000 units which are 1/5 done and there were 3,000 normal lost units. What is the total cost of units transferred to finished goods assuming that the lost units were spoiled at the start of processing assuming the company uses FIFO

 

 The answer is  608,580.00 . Please see explanation below.

Step-by-step explanation

1. Since this is FIFO, the first step is to the beginning WIP units, started and finished for the month and the Ending WIP unit.

2. 2 Compute for the Equivalent unit of production for materials and conversion cost. For the material, the beginning inventory will have 0% since materials are added at beginning of the process and Beginning inventory are already started the previous months. Hence, no materials are added to it for the current month. Then, for the Started and finished units, Ending WIP all of it will have an allocation of 100%. . Normal lost units has no allocations since it occured at the start of the process

   For the conversion cost, the beginning WIP units will have an allocation of 1/4 or 25% since it is already 3/4 done based on the question. Hence, for the current month, only 1/4 is incurred to complete it.

   While for the ending inventory, it will be allocated with 1/5 or 20% since that the allocated conversion cost incurred for the month. No allocation for normal lost units since it was discovered at the beginning stage of the process

3. 3 Get the unit cost of the product and compute for the completed and transferred units. The completed and transfered units will be comprised of the cost of beginning WIP units, started and finished for the current month, and normal spoilage. Since normal spoilage is discovered at the beginning, the cost will only be the transferred in cost. and no allocation for materials and conversion cost will be added

   1. Please  see the attached file for the complete solution