Question

The Fields Company has two manufacturing departments, forming and painting. The company uses the weighted-average method of process costing. At the beginning of the month, the forming department has 32,000 units in inventory, 65% complete as to materials and 35% complete as to conversion costs. The beginning inventory cost of $71,100 consisted of $51,400 of direct materials costs and $19,700 of conversion costs. During the month, the forming department started 410,000 units. At the end of the month, the forming department had 30,000 units in ending inventory, 90% complete as to materials and 40% complete as to conversion. Units completed in the forming department are transferred to the painting department. Cost information for the forming department is as follows: Beginning work in process inventory $ 71,100 Direct materials added during the month 1,564,120 Conversion added during the month 1,061,500 Exercise 16-7A FIFO: Costs per EUP LO C4 Assume that Fields uses the FIFO method of process costing. 1. Calculate the equivalent units of production for the forming department. 2. Calculate the costs per equivalent unit of production for the forming department. (Round your answers to 2 decimal places.) please show all parts.***

Answer 1

• Working forms part of the answer
• FIFO method is sued.
• Working

*Units transferred = Opening + introduced during month – Closing = 32000 +410000 – 30000 = 412000 units

	Units	Material (Complete)	Conversion Cost (Complete)
Opening units	32000	65% [ie 35% will be completed in this month]	35% [ie 65% will be completed in this month]
Introduced	410000
Total	442000
Transferred*	412000	100%	100%
Closing WIP	30000	90%	40%

Of 412000 units transferred, 32000 will be from opening WIP, remaining 380000 from curremtly introduced. This is because FIFO is being used.

• Requirement 1: Calculation of Equivalent Units

Equivalent Units
WIP	Total Units	Material		Conversion cost
Opening	32000	35%	11200	65%	20800
Ending	30000	90%	27000	40%	12000
Introduced and completed	380000	100%	380000	100%	380000
TOTAL Equivalent Units	442000		418,200		412,800

• Requirement 2: Cost per Equivalent Units

	Material	Conversion Cost
Cost incurred during current month	$1,564,120	$1,061,500
TOTAL Equivalent Units	418200	412800
Cost/unit	$3.74	$2.57