Question

Exercise 5S-7 Equivalent Units of Production and Cost per Equivalent Unit-FIFO Method [LO5S-6, LO5S-7]

Pureform, Inc., uses the FIFO 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:

	Units	Materials		Labor		Overhead
Work in process inventory, beginning	97,000	$	101,200	$	54,300	$	69,600
Units started in process	918,000
Units transferred out	940,000
Work in process inventory, ending	75,000
Cost added during the month		$	1,674,620	$	850,465	$	995,225

The beginning work in process inventory was 90% complete with respect to materials and 75% complete with respect to labor and overhead. The ending work in process inventory was 70% complete with respect to materials and 50% 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. Compute the first department's cost per equivalent unit for materials, labor, overhead, and in total for the month. (Round your answers to 2 decimal places.)

Answer 1

Equivalent unit

	Whole unit	EUP-Material	EUP-Labor	EUP-Overhead
Beginning work in process	97000	97000*10% = 9700	97000*25% = 24250	24250
Unit started and completed	940000-97000	843000	843000	843000
Ending WIP	75000	75000*70% = 52500	37500	37500
Equivalent units		905200	904750	904750

2) Cost per equivalent unit

	Material	Labor	Overhead	Total
Cost added	1674620	850465	995225	3520310
Equivalent unit	905200	904750	904750
Cost per equivalent unit	1.85	0.94	1.1	3.89