Question

In: Accounting

Pureform, Inc., uses the FIFO method in its process costing system. It manufactures a product that...

Pureform, Inc., uses the FIFO 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 Labor Overhead Work in process inventory, beginning 65,000 $ 68,500 $ 5,700 $ 21,400 Units started in process 617,000 Units transferred out 610,000 Work in process inventory, ending 72,000 Cost added during the month $ 1,484,100 $ 268,290 $ 327,910 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: 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.)

Solutions

Expert Solution

Requirement 1

Materials Labor Overheads
Equivalent Units of Production    6,00,850      5,96,200      5,96,200

Requirement 2

Materials Labor Overheads Total
$        2.47 $          0.45 $          0.55 $ 3.47

Working

STEP 1
Reconciliation of Units
Units % already completed % completed this period % completed this period
Material Labor Overhead Material Labor Overhead
Beginning WIP       65,000 75% 60% 60% 25% 40% 40%
Units introduced    6,17,000
Total units to be accounted for    6,82,000
Completed and Transferred unit    6,10,000 0% 0% 100% 100% 100%
Ending WIP       72,000 0% 0% 55% 35% 35%
STEP 2
Equivalent Units
Total Units Materials Labor Overheads
Units Transferred: % completed this period Equivalent Units % completed this period Equivalent Units % completed this period Equivalent Units
From WIP       65,000 25%         16,250 40%                  26,000 40% 26000
From units started/Introduced    5,45,000 100%      5,45,000 100%              5,45,000 100% 545000
Total    6,10,000      5,61,250              5,71,000 571000
Total Units Materials Labor Overheads
Ending WIP % completed this period Equivalent Units % completed this period Equivalent Units % completed this period Equivalent Units
Total       72,000 55%         39,600 35%                  25,200 35% 25200
Total EUP    6,82,000      6,00,850              5,96,200      5,96,200
STEP 3
Cost per Equivalent Units
Materials Labor Overheads
Cost incurred in Current Period $ 14,84,100.00 $   2,68,290.00 $    3,27,910.00
Total Equivalent Units              6,00,850             5,96,200              5,96,200
Cost per Equivalent Units $                  2.47 $                 0.45 $                  0.55

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