Question

1. A department uses the FIFO method of process costing. All direct materials are added at the beginning of the process. This department has the following data for this month.

   • 181 units in beginning WIP (72% complete with respect to conversion costs).
   • 11,682 units started
   • 200 units in ending WIP (43% complete with respect to conversion costs).
   • $2,302 beginning WIP direct materials costs
   • $2,335 beginning WIP conversion costs
   • $89,617 current month direct materials costs
   • $90,347 current month conversion costs

   What is the department's direct material cost per equivalent unit for this month (round final answer to nearest cent if necessary)?

Answer 1

Solution-------Direct material cost per equivalent unit= $7.67

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	181	100%	72%	0%	28%
Units introduced	11,682
Total units to be accounted for	11,863
Completed and Transferred unit	11,663	0%	0%	100%	100%
Ending WIP	200	0%	0%	100%	43%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	181	0%	-	28%	51
From units started/Introduced	11,482	100%	11,482	100%	11,482
Total	11,663		11,482		11,533
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	200	100%	200	43%	86
Total EUP	11,863		11,682		11,619

.

	Material
Cost incurred in Current Period	$ 89,617
Total Equivalent Units	11,682
Cost per Equivalent Units	$ 7.67