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Chapter 9
8.2 First in First Out (FIFO)
Tinbox makes toys cars on a production line. The details of the process
in Period 2 are as follows:
Physical units Material Conversion
OWIP 250 100% complete 60% complete
Costs in OWIP $54,000 $42,000
Completed output 3,200
Costs in Period 2 $135,450 $100,800
CWIP 200 100% complete 50% complete
Calculate the value of the completed output and closing work in progress
using the FIFO technique
Physical units Materials Conversion
Step 1: EU % EU % EU
OWIP completed 250 0 0 40 100
Completed 2,950 100 2,950 100 2,950
CWIP 200 100 200 50 100
Total 3,400 3,150 3,150
Step 2: Costs $ $
Period 135,450 100,800
Total 135,450 100,800
Step 3: Cost per EU 43 32
Step 4 – value the outputs
Completed units = B/fwd OWIP cost + cost of completing OWIP + cost of fully worked
unit
= 96,000 + (100 × 32) + (2,950 × (43 + 32)) =$320,450
CWIP = (200 × $43) + (100 × $32) = $11,800
Illustrations and further practice
Now try TYU questions 5 and 6 from Chapter 6
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