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: 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 Materials 5,000 $4,320 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. Determine the first department's cost per equivalent unit for materials, labor, and overhead for the month (Round your answers to 2 decimal places.) Materials Labor Overhead 1. Equivalent units of production 2. Cost per equivalent unit

Answer 1

Solution:

		Materials	Labor	Overhead
1.)	Equivalent units of production	48,000	46,000	46,000
2.)	Cost per equivalent unit	$1.19	$0.49	$0.74

1.) Equivalent Units of Production:

		Materials		Labor		Overhead
	Physical Units (A)	% Completed (B)	Equivalent Units Production (A × B)	% Completed (C)	Equivalent Units Production (A × C)	% Completed (D)	Equivalent Units Production (A × D)
Units completed and transferred out	42,000	100%	42,000	100%	42,000	100%	42,000
Ending work in process	8,000	75%	6,000 (8,000 × 75%)	50%	4,000 (8,000 × 50%)	50%	4,000 (8,000 × 50%)
Total	50,000		48,000	46,000		46,000
	Materials	Labor	Overhead
Equivalent units of production	48,000	46,000	46,000

2.) Cost per Equivalent Units Production:

	Materials	Labor	Overhead
Beginning work in process	$4,320	$1,040	$1,790
Cost added during the month	$52,800	$21,500	$32,250
Total cost (a)	$57,120	$22,540	$34,040
Equivalent units of production (b)	48,000	46,000	46,000
Cost per equivalent unit (a) ÷ (b)	$1.19 ($57,120 ÷48,000 units)	$0.49 ($22,540 ÷ 46,000 units)	$0.74 ($34,040 ÷ 46,000 units)
	Materials	labor	Overhead
Cost per equivalent units of production	$1.19	$0.49	$0.74

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