Question

Humphrey Manufacturing produces automobile parts and batteries. All direct materials are added at the beginning of production and conversion costs are incurred evenly throughout production. The following production information is for the month of April:

Units:

Work in process, March 31: 6,000 units (40% complete)

Units started in April 42,000

Units completed during April 40,000

Work in process, April 30 25% complete

Costs in Beginning WIP:

Direct Materials $7,500

Conversion Costs $2,125

Total $9,625

Costs Added this Period:

Direct Materials $70,000

Conversion Costs $42,500

Total $112,500

For the FIFO method calculate the equivalent units, cost per equivalent units, and assign costs to production for April.

Answer 1

Under FIFO Method:

1. Physical units:

Beginning Work in process	6000
Units introduced	42000
Total	48000
Completed from Beginning Work in process	6000
Completed from Units introduced	34000
Ending work in process (b/f)	8000
Total	48000

2. Equivalent units:

Particulars	Direct material	Conversion cost
Beginning work in process	0	3600
Completed units	34000	34000
Ending work in process	8000	2000
Equivalent units	42000	39600

3. Cost per equivalent units:

	Particulars	Direct material	Conversion cost
a	Current period cost	$70000	$42500
b	Equivalent units	42000	39600
c	Cost per equivalent units [a/b]	1.67	1.07

4. Evaluation:

Particulars	Direct materials	Conversion cost	Total
Beginning work in process
Previous month	7500	2125	9625
Current	0	(3600 x 1.07) = 3852	3852
Introduced and completed	(34000 x 1.67)=56780	(34000 x 1.07)=36380	93160
Ending work in process	(8000 x 1.67)=13360	(2000 x 1.07)=2140	15500
Total	122137

Under Weighted average method:

1. Physical units:

Beginning Work in process	6000
Units introduced	42000
Total	48000
Completed	40000
Ending work in process (b/f)	8000
Total	48000

2. Equivalent units:

Particulars	Direct material	Conversion cost
Completed units	40000	40000
Ending work in process	8000	2000
Equivalent units	48000	42000

3. Cost per equivalent units:

	Particulars	Direct material	Conversion cost
a	Current period cost	$70000	$42500
b	Cost of beginning work in process	7500	2125
c	Total	77500	44625
d	Equivalent units	48000	42000
e	Cost per equivalent units [c/d]	1.62	1.06

4. Evaluation:

Particulars	Direct materials	Conversion cost	Total
Introduced and completed	(40000 x 1.62)=64800	(40000 x 1.06)=42400	107200
Ending work in process	(8000 x 1.62)=12960	(2000 x 1.06)=2120	15080
Total	122280

Please rate, Thanks.