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Pablo Company calculates the cost for an equivalent unit of production using process costing. Data for...

Pablo Company calculates the cost for an equivalent unit of production using process costing.

Data for June
Work-in-process inventory, June 1: 20,000 units
Direct materials: 100% complete $ 40,000
Conversion: 40% complete 16,000
Balance in work-in-process, June 1 $ 56,000
Units started during June 48,000
Units completed and transferred out 48,000
Work-in-process inventory, June 30 20,000
Direct materials: 100% complete
Conversion: 80% complete
Costs incurred during June
Direct materials $ 129,600
Conversion costs
Direct labor 129,600
Applied overhead 168,000
Total conversion costs $ 297,600

Required:

1. Compute the cost per equivalent unit for both the weighted-average and FIFO methods. (Round your answers to 3 decimal places.)

Solutions

Expert Solution

1
Weighted average method:
Direct materials Conversion costs
Units completed and transferred out 48000 48000
Work-in-process inventory, June 30 20000 16000
Equivalent units of production 68000 64000
Cost per equivalent unit of production:
Cost of beginning work in process 40000 16000
Costs incurred this period 129600 297600
Total costs 169600 313600
÷ Equivalent units of production 68000 64000
Cost per equivalent unit of production 2.494 4.900
Cost per equivalent unit = 2.494+4.9= $7.394
FIFO method:
Direct materials Conversion costs
Work-in-process inventory, June 1 0 12000 =20000*(1-40%)
Started and completed 28000 28000
Work-in-process inventory, June 30 20000 16000
Equivalent units of production 48000 56000
Costs incurred during June 129600 297600
÷ Equivalent units of production 48000 56000
Cost per equivalent unit of production 2.700 5.314
Cost per equivalent unit = 2.7+5.314= $8.014

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