Question

Saddleback Company makes camping lanterns using a single production process. All direct materials are added at the beginning of the manufacturing process. Information for the month of March follows: Units Costs Beginning work in process (30% complete) 126,800 Direct materials 184,000 Conversion cost 336,000 Total cost of beginning work in process 520,000 Number of units started 235,000 Number of units completed and transferred to finished goods Ending work in process (65% complete) Current period costs 334,000 Direct materials 499,400 640,000 Conversion cost $1,139,400 Total current period costs Required: 1. Using FIFO method of process costing, complete each of the following steps: a. Reconcile the number of physical units worked on during the period. b. Calculate the number of equivalent units. c. Calculate the cost per equivalent unit. d. Reconcile the total cost of work in process.

Answer 1

a.

	Physical units
Beginning units	126,800
Units started	235,000
Total units	361,800
Units completed	334,000
Ending units	27,800

b.

		Equivalent Units
	Physical Units	Direct material	Conversion
Beginning units	126,800	0	88,760
Units started and completed	207,200	207,200	207,200
Ending units	27,800	27,800	18,070
Total units		235,000	314,030

c.

	Direct material	Conversion
Total cost	$499,400	$640,000
Total equivalent units	235,000	314,030
Cost per equivalent unit	$2.1251	$2.038

d.

		Direct material	Conversion	Total cost
Beginning Work in process	$520,000	0	$180,893 (88,760*$2.038)	$700,893
Units started and completed		440,321 (207,200*$2.1251)	422,274 (207,200*$2.038)	862,595
Ending work in process		59,078 (27,800*$2.1251)	36,827 (18,070*$2.038)	95,905
Total cost accounted for	$520,000	$500,550	$640,621	$1,659,393