Question

URGENT in two hours.

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 Materials Conversion Work-in-Process Inventory, May 1 4,000 100 % 50 % Started during May 12,000 Units to account for 16,000 Units from beginning Work-in-Process, which were completed and transferred out during May 4,000 Started and completed during May 7,200 Work-in-Process Inventory, May 31 4,800 100 % 50 % Total units accounted for 16,000 The following cost data are available: Work-in-Process Inventory, May 1 Direct materials $ 61,280 Conversion 7,256 Costs incurred during May Direct materials 180,480 Conversion 301,600 Required: 1. Calculate the equivalent units of direct materials and conversion during May. Use the FIFO method. 2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the FIFO method.

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 4,000 12,000 16,000 Materials Conversion 100% 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 4,000 7,200 4,800 16,000 100% 50% The following cost data are available: Work-in-Process Inventory, May 1 Direct materials Conversion Costs incurred during May Direct materials Conversion $ 61,280 7,256 180, 480 301,600 Required: 1. Calculate the equivalent units of direct materials and conversion during May. Use the FIFO method. 2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the FIFO method.

Answer 1

1)	Statement of equivalent production					Degree of completion
						Direct Material			Conversion
	Particulars	Units	Particulars	Units		%	Units		%	Units
	Beginning WIP	4000	Transfer to next process:
	Units Started	12000	From Beginning WIP	4000		-	-		50%	2000
			From Current Intro	7200		100%	7200		100%	7200
			Ending WIP	4800		100%	4800		50%	2400
		16000		16000			12000			11600

2)	Statement of cost per equivalent production
	Element of costs	Units	Costs	Cost/eq. units
	Direct Material	12000	$     1,80,480.00	$                15.04
	Conversion	11600	$     3,01,600.00	$                26.00
				$                41.04