Question

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: Materials $ 4,320 Labor $ 1,040 Overhead $ 1,790 Work in process inventory, beginning Units started in process Units transferred out Work in process inventory, ending Cost added during the month Units 5,000 45,000 42,000 8,000 $ 52,800 $ 21,500 $ 32,250 The beginning work in process inventory was 80% complete with respect to materials and 60% complete with respect to labor and overhead. The ending work in process inventory was 75% 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.) Materials Labor Overhead Total 44,000 43,000 43,000 1. Equivalent units of production 2. Cost per equivalent unit

Answer 1

Equivalent units of production-FIFO Method Units % Material EUP- Material % Labor EUP - Labor % Overhead EUP - Overhead Total Units 5000 20% 2000 Units to be accounted for:- Beginning Work in process units Started & completed Ending work in Process units Equivalent units 37000 2000 37000 Add Add 37000 40% 100% 50% 100% 75% 1000 37000 60001 440001 40% 100% 50% 5000 37000 8000 50000 8000 50000 4000 43000) 4000 43000 Started & completed units = units transferred out - units in beginning inventory = 42000 - 5000 = 37000 The units from beginning inventory are 80% complete in regards of material in previous month so remaining 20% was completed in this month & 60% complete in respect of labor & overhead so remaining 40% was completed this month. From Beginning Work in process units x percentage completed this month 5000 x 20% = 1000 5000 x 40% = 2000 5000 x 40% = 2000 On the units started & completed this month total 100% work was done this month. Units in ending inventory was 75% complete in regards of material this month and 50% complete in regards of labor & overhead this month. Ending WIP = Units x Percentage complete this month 8000 x 75% = 6000 8000 x 50% = 4000 8000 x 50% = 4000 Total Cost Per Equivalent units Cost incurred this period Total Cost Equivalent units of productiom Cost per Equivalent unit $ $ Material 52,800 $ 52,800 $ 44000 Labor 21,500 $ 21,500 $ Overhead 32,250 32,250 43000 Divide 43000 $ 1.20$ 0.50 $ 0.75$ 2.45