Question

The SCHEID CORPORATION manufactures chairs that must go through two departments, A and B. Consider Department B, in which direct materials are added at the end of the process. Conversion costs are added evenly during the process. The accounting records for September provide the following information: Using weighted average, prepare a complete production report, computing (a) the cost of the units transferred out and (b) the cost of the ending inventory. Assume for this part only that SCHEID is using the FIFO method. Using this method, the transferred in costs in the beginning inventory using FIFO is $28, 920 (not $29,000), and the transferred in cost using FIFO during September is $94,000 (not $96,000). Prepare a complete production report, computing (a) the cost of the units transferred out and (b) the cost of the ending inventory. Very briefly explain why the FIFO transferred in costs in part 2 above are different than the weighted average transferred in costs in part 1 above.