Question

8-28. Compute Costs per Equivalent Unit: Weighted-Average Method The following information pertains to the Moline Facility for the month of May (all materials are added at the beginning of the process). (CPA adapted) (LO 8-3 Units Material Costs Beginning work in process Started in May. Units completed Ending work in process 54,000 144,000 153,000 45,000 $148,500 475,200 Required Compute the cost per equivalent unit for materials using the weighted average method. 8-29. Compute Costs per Equivalent Unit: FIFO Method Refer to the data in Exercise 8-28. (LOE Required Compute the cost per equivalent unit for materials using the FIFO method.

Answer 1

Part 1) Calculation of Cost per equivalent unit under Weighted Average Method

Total costs = Beginning WIP + started in May

Total cost = 148500 +475200 =$623700

Total Equivalent units =units completed + ending WIP

Total equivalent units =153000 +45000=198000

Cost per equivalent unit=Total cost/Total equivalent units

Cost per equivalent unit=623700/198000=$3.15

Part 2) Under FIFO Method

	Units	Cost
Beginning WIP	54000	148500
Started in may	144000	475200
Total	198000	623700
Less - Ending WIP(475200*45000/144000)	45000	148500
Units completed	153000	475200

Cost per equivalent unit =475200/153000=$3.11(Rounded off)

Answer 2

Compute the cost per equivalent unit for materials using the FIFO method

Physical Units		Materials Eq.Units
Flow of units:
Units to be accounted for:
Beginning WIP inventory	54,000
Units started this period	144,000
Total units to account for	198,000
Units accounted for:
Completed and transferred out
From beginning WIP inventory (54,000 × 100%)	54,000		0
Started and completed currently (99,000a × 100%)	99,000		99,000
Units in ending inventory:
Materials (45,000 × 100%)	45,000		45,000
Total units accounted for	198,000		144,000

^a99,000 units started and completed = 153,000 units transferred out – 54,000 beginning WIP units.

 

	Direct Materials
Flow of costs:
Costs to be accounted for:
Total costs to be accounted for (current period costs only)	$	475,200
Cost per equivalent unit
Materials ($475,200 ÷ 144,000 units)	$	3.30