Question

Pureform, Inc., uses the FIFO method in its process costing system. It manufactures a product that passes through two departments. Data for a recent month for the first department follow:

	Units	Materials		Labor		Overhead
Work in process inventory, beginning	65,000	$	68,500	$	5,700	$	21,400
Units started in process	617,000
Units transferred out	610,000
Work in process inventory, ending	72,000
Cost added during the month		$	1,484,100	$	268,290	$	327,910

The beginning work in process inventory was 75% complete with respect to materials and 60% complete with respect to labor and overhead. The ending work in process inventory was 55% complete with respect to materials and 35% complete with respect to labor and overhead.

Required:

1. Compute the first department's equivalent units of production for materials, labor, and overhead for the month.

2. Compute the first department's cost per equivalent unit for materials, labor, overhead, and in total for the month. (Round your answers to 2 decimal places.)

		Materials	Labor	Overhead
1.	Equivalent Units of Production
2.	Cost Per Equivalent Unit

Answer 1

Solution

	Material	Labor	Overhead
Equivalent units	600,850	596,200	584,860

.

	Material	Labor	Overhead
Cost Per Equivalent units	$                    2.47	$               0.45	$               0.56

Working

Reconciliation of Units
	Units	% already completed			% completed this period
		Material	Labor	Overhead	Material	Labor	Overhead
Beginning WIP	65,000	75%	60%	60%	25%	40%	40%
Units introduced	617,000
Total units to be accounted for	682,000
Completed and Transferred unit	610,000	0%	0%	0%	100%	100%	100%
Ending WIP	72,000	0%	0%	0%	55%	35%	35%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Labor		Overhead
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	65,000	25%	16,250	40%	26,000	40%	26,000
From units started/Introduced	545,000	100%	545,000	100%	545,000	100%	545,000
Total	610,000		561,250		571,000		571,000
	Total Units	Material		Labor		Overhead
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	72,000	55%	39,600	35%	25,200	35%	13,860
Total EUP	682,000		600,850		596,200		584,860