Question

Fields Company has two manufacturing departments, forming and painting. The company uses the weighted-average method of process costing. At the beginning of the month, the forming department has 37,000 units in inventory, 80% complete as to materials and 20% complete as to conversion costs. The beginning inventory cost of $84,100 consisted of $59,200 of direct materials costs and $24,900 of conversion costs. During the month, the forming department started 540,000 units. At the end of the month, the forming department had 40,000 units in ending inventory, 80% complete as to materials and 30% complete as to conversion. Units completed in the forming department are transferred to the painting department. Cost information for the forming department follows. Beginning work in process inventory $ 84,100 Direct materials added during the month 1,949,370 Conversion added during the month 1,254,270 Assume that Fields uses the FIFO method of process costing.

1. Calculate the equivalent units of production for the forming department.

2. Calculate the costs per equivalent unit of production for the forming department.

Answer 1

Unit transferred out = 37000+540000-40000 = 537000

Unit started and completed = 537000-37000 = 500000

a) Equivalent unit

	Whole unit	% Material	EUP-Material	% Conversion	EUP-Conversion
Beginning inventory	37000	20%	7400	80%	29600
Unit started and completed	500000	100%	500000	100%	500000
Ending inventory	40000	80%	32000	30%	12000
Equivalent unit♥	577000		539400		541600

b) Cost per equivalent unit

	Material	Conversion
Cost added	1949370	1254270
Equivalent unit	539400	541600
Cost per equivalent unit	3.61	2.32