Question

Highlands Company uses the FIFO method in its process costing system. It processes wood pulp for various manufacturers of paper products. Data relating to tons of pulp processed during June are provided below:

		Percent Completed
	Tons of Pulp	Materials		Labor and Overhead
Work in process, June 1	21,500	82	%	80	%
Work in process, June 30	30,000	64	%	46	%
Started into production during June	191,300

Required:

1. Compute the number of tons of pulp completed and transferred out during June.

2. Compute the equivalent units of production for materials and for labor and overhead for June.

Answer 1

Requirement 1

Units completed and transferred out = 182,800

Requirement 2

	Material	Conversion
Equivalent Units of Production	184,370	179,400

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	21,500	82%	80%	18%	20%
Units introduced	191,300
Total units to be accounted for	212,800
Completed and Transferred unit	182,800	0%	0%	100%	100%
Ending WIP	30,000	0%	0%	64%	46%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	21,500	18%	3,870	20%	4,300
From units started/Introduced	161,300	100%	161,300	100%	161,300
Total	182,800		165,170		165,600
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	30,000	64%	19,200	46%	13,800
Total EUP	212,800		184,370		179,400