Question

Montoya Company manufactures polyurethane finish in a single production department. Production begins by blending various chemicals, initial cost, and ends by filling the containers. The containers are then transferred to the shipping department. Labor and overhead are added continuously throughout the process. Management has determined that 2% of good units is normal spoilage. Spoilage can be identified as soon as the chemicals are added. Factory overhead is applied at the rate of $3 per direct labor dollar. Costs Work-in-process inventory, May 1    Direct Materials $52,500    Direct Labor ($10 per hour)     8,500 May costs added:    Direct Materials 332,500    Direct Labor ($10 per hour) 38,500 Units Work-in-process inventory, May 1 (30% complete) 2,000 Transferred to Shipping Department 25,500 Work-in-Process Inventory, May 31 (70% complete) 5,500   Factory OH= 3*38,500= $115,500

A) Total equivalent units for materials under the FIFO method are calculated to be: B) Total equivalent units for conversion under the FIFO method are calculated to be: C) Cost per equivalent unit for materials under the FIFO method is calculated to be (rounded): D) cost per equivalent unit for conversion under the FIFO method is calculated to be (rounded):

Answer 1

A = 29,000
B = 28,750
C = 11.47
D = 5.36
Statement of Equivalent production
Particulars	Direct Materials	%completion	Equivalent mat	Conversion	%completion	Equivalent Conv	Total
Work-in-process inventory, May 1	2,000.00	0%	-	2,000.00	70%	1,400.00
Units started and completed =	23,500.00	100%	23,500.00	23,500.00	100%	23,500.00
Units transferred	25,500.00			25,500.00
Work-in-Process Inventory, May 31	5,500.00	100%	5,500.00	5,500.00	70%	3,850.00
Equivalent Units			29,000.00			28,750.00
Current Month Costs			332,500.00			154,000.00	486,500.00
Cost per Equivalent units			11.47			5.36	16.82
Note - Assumed materials are entered at the beginning of the process