Process Costing: FIFO Costing Method
Canned fruits and vegetables are the main products made by Good Foods, Inc. All direct materials are added at the beginning of the Mixing Department’s process. When the ingredients have been mixed, they go to the Cooking Department. There the mixture is heated to 100° Celsius and simmered for 20 minutes. When cooled, the mixture goes to the Canning Department for final processing. Throughout the operations, direct labor and overhead costs are incurred uniformly. No direct materials are added in the Cooking Department. Cost data and other information for the Mixing Department for January are as follows:
|
Direct Materials |
Conversion Costs |
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|
Production Cost Data |
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|
Mixing Department |
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|
Beginning inventory |
$ 28,560 |
$ 5,230 |
|
Current period costs |
450,000 |
181,200 |
|
Work in process inventory |
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|
Beginning inventory |
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|
Mixing Department (40% complete) |
5,000 liters |
|
|
Ending inventory |
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|
Mixing Department (60% complete) |
6,000 liters |
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|
Unit production data |
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Units started during January |
90,000 liters |
|
|
Units transferred out during January |
89,000 liters |
Assume that no spoilage or evaporation loss took place during January.
Required
1. Using the FIFO costing method, prepare a process cost report for the Mixing Department for January.
2. Explain how the analysis for the Cooking Department will differ from the analysis for the Mixing Department.