Question

First-In, First-Out Method; Equivalent Units

Aztec Inc. produces soft drinks. Mixing is the first department, and its output is measured in gallons. Aztec uses the FIFO method. All manufacturing costs are added uniformly. For July, the mixing department provided the following information:

Production:
Units in process, July 1, 80% complete		30,000 gallons
Units completed and transferred out		195,000 gallons
Units in process, July 31, 75% complete		12,000 gallons
Costs:
Work in process, July 1		$ 48,000
Costs added during July		390,000

Required:

1. Calculate the equivalent units for July.
equivalent units

2. Calculate the unit cost. Round your answer to the nearest cent.
$per unit

3. Assign costs to units transferred out and EWIP using the FIFO method. Note: Do not round interim computations.

Cost of units transferred out	$
Ending work in process	$

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units			30,000
Add: Units Started in Process			1,77,000
Total Units to account for:			2,07,000
UNITS TO BE ACCOUNTED FOR:
Units completed from beginning WIP		30000
Units started and completed			1,65,000
Ending Work in Process			12,000
Total Units to be accounted for:		2,07,000
Equivalent Units:
			UNITS	Cost
				% Completion	Units
Units completed from Beg.	30000	20%	6,000
Units started and completed	165000	100%	1,65,000
Ending Work in Process	12000	75%	9,000
Total Equivalent units	207000		1,80,000
TOTAL COST TO ACCOUNT FOR:
				Cost
Cost Added during May		3,90,000
Total Cost to account for:		3,90,000
Equivalent Units			1,80,000
Cost per Equivalent unit		2.1667
TOTAL COST ACCOUNTED FOR:
Units completed from Beg. Wip (30000 units)
				Equivalent unit	Cost per EU	Total Cost
Cost of beginning WIP				48000
Cost				6,000	2.1667	13000.2
Total cost to complete beginning WIP				61000
Units started and completed (165000 units)
				Equivalent unit	Cost per EU	Total Cost
Cost				1,65,000	2.1667	357500
Total cost of units started and complted				357500
Total cost of units transferred out				418500
Ending Work in process (12000 units)
				Equivalent unit	Cost per EU	Total Cost
Cost				9,000	2.1667	19500
Total cost of Ending Work in process:				19500