Question

Badgersize Company has the following information for its Forming Department for the month of August.

Work in Process Inventory, August 1: 20,000 units
Direct materials: 100% complete	$	80,000
Conversion: 20% complete		24,000
Balance in work in process, August 1	$	104,000
Units started during August		54,000
Units completed and transferred in August		58,000
Work in process (70% complete), August 31		?
Costs charged to Work in Process in August
Direct materials	$	164,000
Conversion costs:
Direct labor	$	101,000
Overhead applied		139,000
Total conversion	$	240,000

Assume materials are added at the start of processing.

Required:

a.    Calculate the equivalent units for the Forming Department for the month of August.

Direct Materials:

Conversion:

b.   Find the cost per equivalent unit of input resource. (Round your answers to 2 decimal places.)

Direct Materials:

Conversion:

Answer 1

Since method of calculating Equivalent units was not provided in the question. Solution is provided for Weighted average method and FOFO method .

Weighted average		Units
Reconciliation of Units
A	Opening WIP	20,000
B	Introduced	54,000
C=A+B	TOTAL	74,000
D	Transferred	58,000
E=C-D	Closing WIP	16,000

Statement of Equivalent Units (Weighted Average)
		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	58,000	100%	58,000	100%	58,000
Closing WIP	16,000	100%	16,000	70%	11,200
Total	74,000	Total	74,000	Total	69,200

Cost per Equivalent Units (Weighted Average)
COST		Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost		$          80,000.00	$            24,000.00	$            104,000.00
Cost incurred during period		$        164,000.00	$          240,000.00	$            404,000.00
Total Cost to be accounted for		$        244,000.00	$          264,000.00	$            508,000.00
Total Equivalent Units		74,000	69,200
Cost per Equivalent Units		$                3.2973	$                  3.8150

Statement of cost (Weighted Average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$               3.30	16,000	$            52,756.76	58,000	$ 191,243.24
Conversion Cost	$               3.82	11,200	$            42,728.32	58,000	$ 221,271.68
TOTAL	$ 508,000.00	TOTAL	$            95,485.08	TOTAL	$ 412,514.92

Cost to be accounted for
Beginning Work In Progress:
Material	$    80,000.00
Conversion Cost	$   24,000.00	$        104,000.00
Cost incurred during period:
Cost Transferred	$                   -
Material	$ 164,000.00
Conversion Cost	$ 240,000.00	$        404,000.00
Total Cost to be accounted for				$            508,000.00
Cost accounted for
Cost of Units transferred	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	58,000	$                     3.30	$          191,243.24
Conversion Cost	58,000	$                     3.82	$          221,271.68
				$            412,514.92
Cost of ending WIP	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Cost Transferred	-	$                          -	$                           -
Material	16,000	$                     3.30	$            52,756.76
Conversion Cost	11,200	$                     3.82	$            42,728.32
				$               95,485.08
Total Cost accounted for				$            508,000.00

FIFO METHOD

EUP-FIFO Method
	Units	% Material	EUP Material	% Conversion	EUP Conversion
Beginning Work in Process	20000	100%	20000	20%	4000
Started and completed	54000	100%	54000	100%	54000
Ending Work in Process	16000	100%	16000	70%	11200
Total Units	90000		90000		69200
Cost per Equivalent Unit of Production
			Materials		Conversion
Cost incurred			$      164,000.00		$      240,000.00
Total costs		Costs	$      164,000.00	Costs	$      240,000.00
EUP		EUP	90000	EUP	69200
Cost per Equivalent Units of production			$                   1.82		$                   3.47

Total cost accounted for: Under FIFO
Beginning Inventory Cost:				$      104,000.00
Cost to complete beginning inventory	EUP	Cost per EUP	Total cost
Direct Material	20000	$                         1.82	36444.44444
Conversion	4000	$                         3.47	13872.83237
Total cost to complete beginningf inventory				50317.27681
Total cost of units in beginning inventory				$      154,317.28
Cost of units started and completed	EUP	Cost per EUP	Total cost
Direct Material	54000	$                        1.82	$        98,400.00
Conversion	54000	$                         3.47	$      187,283.24
Total cost of units started and completed				$      285,683.24
Total cost of Units transferred out				$      440,000.51
Costs of Ending WIP:	EUP	Cost per EUP	Total cost
Direct Material	16000	$                         1.82	$        29,155.56
Conversion	11200	$                         3.47	$        38,843.93
Total cost of Ending WIP				$        67,999.49
Total cost accounted for				$      508,000.00