Question

Pureform, Inc., uses the weighted average 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: Materials $ 75,100 Labor 36,400 Overhead $ 49,100 $ Work in process inventory, beginning Units started in process Units transferred out Work in process inventory, ending Cost added during the month Units 79,000 751,000 800,000 30,000 $ 992,550 $ 449,000 $ 606,190 The beginning work in process inventory was 70% complete with respect to materials and 55% complete with respect to labor and overhead. The ending work in process inventory was 50% complete with respect to materials and 30% 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. Determine the first department's cost per equivalent unit for materials, labor, and overhead 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

Question 1

In weighted average method, it is considered that the units completed and transferred out are 100% manufactured in the current period. So, equivalent units of units transferred are 100% multiplied by the units transferred.

To calculate the equivalent units for the closing WIP, we need to multiply the units by percentage of completion.

Question 2

Units entory Inventory Labour and overhead Equivalent units % Equivalent units | % Units completed and transferred Closing WIP Total equivalent units 800000l 100% 30000l 50% 800000 100% 15000 30% 815000 800000 9000 809000

Since we have considered that the units transferred are completed 100% in current period, we have to take into consideration cost of opening WIP while calculating the cost per equivalent unit.

We have to add the cost of opening WIP and cost incurred during the period and then divide it by equivalent units to calculate the cost per equivalent unit.

Cost of opening WIP Cost incurred in current period Total cost • Equivalent units Cost per equivalent unit Material 75,100 992,550 1,067,650 815,000 1.31 Labour 36,400 449,000 485,400 809,000 Overhead 49,100 606,190 655,290 809,000 0.81 0.60