Question

: Weatherly Lumber Company processes wood pulp for manufacturing various paper products. The company employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process, and conversion costs are : incurred uniformly throughout the process. This is the company's production schedule for May: Percent Completed Tons of Pulp 2,000 12,000 14,000 Materials 100% Conversion 50% Work-in-Process Inventory, May 1 Started during May Units to account for Units from beginning Work-in-process, which were completed and transferred out during May Started and completed during May Work-in-Process Inventory, May 31 Total units accounted for 2,000 7,200 4,800 14,000 100% 50%

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	12,000	10,600

.

	Material	Conversion
Cost per equivalent Unit	$           15.97	$                26.50

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	2,000	100%	50%	0%	50%
Units introduced	12,000
Total units to be accounted for	14,000
Completed and Transferred unit	9,200	0%	0%	100%	100%
Ending WIP	4,800	0%	0%	100%	50%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	2,000	0%	-	50%	1,000
From units started/Introduced	7,200	100%	7,200	100%	7,200
Total	9,200		7,200		8,200
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	4,800	100%	4,800	50%	2,400
Total EUP	14,000		12,000		10,600

.

STEP 3
Cost per Equivalent Units
	Material		Conversion cost		TOTAL
Cost incurred in Current Period	$ 191,640		$ 280,900		$ 472,540
Total Equivalent Units	12,000		10,600
Cost per Equivalent Units	$ 15.97		$ 26.50		$ 42.47