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: Units Materials 57,00051,000 19,300 27,900 Labor Overhead Work in process inventory, beginning Units started in process Units transferred out Work in process inventory, ending Cost added during the month 539,000 560,000 36,000 $1,068,730 $ 107,680 134,600 The beginning work in process inventory was 75% complete with respect to materials and 60% complete with respect to labor and overhead. The ending work in process inventory was 55% complete with respect to materials and 35% complete with respect to labor and overhead Required: Assume that the company uses the FIFO method in its process costing system 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 1. Equivalent units of production 2. Cost per equivalent unit

Answer 1

1) Computation of department equivalent unit of production
Particulars			Material	labour	Overhead
transfer to next department			14250	22800	22800
Unit transferred out			560000	560000	560000
WIP inventory - ending			19800	12600	12600
Equivalent unit of production			594050	595400	595400
2) Computation of cost per equivalent unit
Particulars			Material	labour	Overhead
Beginning WIP			51000	19300	27900
Cost incurred			1068730	107680	134600
total cost (A)			1119730	126980	162500
equivalent unit of production (B)			594050	595400	595400
Cost per equivalent unit (A)/(B)			1.88	0.21	0.27