Question

Pureform, Inc., uses the weighted-average 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 $ 54,400 Labor $ 22,100 Overhead $ 26,900 Work in process inventory, beginning Units started in process Units transferred out Work in process inventory, ending Cost added during the month Units 63,000 599,000 620,000 42,000 $ 719,840 $ 272,760 $ 332,060 The beginning work in process inventory was 80% complete with respect to materials and 65% complete with respect to labor and overhead. The ending work in process inventory was 60% 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. Determine the first department's cost per equivalent unit for materials, labor, and overhead for the month. (Round your answers to 2 decimal places.) X Answer is not complete. Materials Labor Overhead 1. Equivalent units of production Cost per equivalent unit 2.

Answer 1

1) Under weighted average method, equivalent units are to be calculated only for units completed & transferred out and units lying as ending work in process as it is assumed that the units once entered into the process become integral part of total units and no segregation between units transferred from beginning work in process and introduced during current process. Conversion cost includes Labor + Overheads. So, % of completion of beginning Work in Process Inventory doesn't affect the calculation of equivalent units of production. Particulars Physical % work done Units Materials EUP- Materials % work done Labor EUP- Labor % work done Overhead EUP- Overhead Completed and transferred Ending work in process Equivalent Units of Production (EUP) 620,000 42,000 662,000 100% 60% 620,000 25,200 645,200 100% 50% 620,000 21,000 641,000 100% 50% 620,000 21,000 641,000 [620000 units x 100%; 620000 units x 100%; 620000 units x 100%] [42000 units x 60%; 25200 units x 50%; 25200 units x 50%] 2) Cost per equivalent units of production Cost of beginning work in process Cost added during the period Total Costs to Account For Divided by Equivalent units of Production (EUP) Cost per Equivalent Unit Materials Labor $54,400 $22,100 $719,840 $272,760 $774,240 $294,860 645,200 641,000 $1.20 $0.46 Overhead $26,900 $332,060 $358,960 641,000 [As computed EUP schedule presented above] $0.56 $774240 / 645200 units = $1.20; $294860 / 641000 units = $0.46; $358960 / 641000 units = $0.56]