Question

Pitt Enterprises manufactures jeans. All materials are introduced at the beginning of the manufacturing process in the Cutting Department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Information for the Cutting Department for the month of May follows.

Work in Process, May 1 (50,000 units, 100% complete for direct materials, 40% complete with respect to conversion costs; includes $70,500 of direct material cost; $34,050 of conversion costs).

Units started in May	225,000
Units completed in May	200,000

Work in Process, May 31 (75,000 units, 100% complete for direct materials; 20% complete for conversion costs).

Costs incurred in May
Direct materials	$	342,000
Conversion costs	$	352,950

If Pitt Enterprises uses the FIFO method of process costing, compute the equivalent units for direct materials and conversion respectively for May.

Multiple Choice

• 150,000 materials; 150,000 conversion.

• 195,000 materials; 195,000 conversion.

• 275,000 materials; 215,000 conversion.

• 195,000 materials; 225,000 conversion.

• 225,000 materials; 195,000 conversion.

Answer 1

Correct answer--------------225,000 materials; 195,000 conversion.

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	50,000	100%	40%	0%	60%
Units introduced	225,000
Total units to be accounted for	275,000
Completed and Transferred unit	200,000	0%	0%	100%	100%
Ending WIP	75,000	0%	0%	100%	20%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	50,000	0%	-	60%	30,000
From units started/Introduced	150,000	100%	150,000	100%	150,000
Total	200,000		150,000		180,000
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	75,000	100%	75,000	20%	15,000
Total EUP	275,000		225,000		195,000