Question

The Fields Company has two manufacturing departments, forming and painting. The company uses the FIFO method of process costing. At the beginning of the month, the forming department has 33,000 units in inventory, 65% complete as to materials and 35% complete as to conversion costs. The beginning inventory cost of $76,100 consisted of $54,400 of direct material costs and $21,700 of conversion cost. During the month, the forming department started 460,000 units. At the end of the month, the forming department had 46,000 units in ending inventory, 85% complete as to materials and 35% 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 $76,100 Direct materials added during the month $1,711,200 Conversion added during the month $1,136,700 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 answer to 2 decimal places.)

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	464,650	451,550

.

	Material	Conversion	Total
Cost per equivalent Unit	$             3.68	$                   2.52	$ 6.20

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	33,000	65%	35%	35%	65%
Units introduced	460,000
Total units to be accounted for	493,000
Completed and Transferred unit	447,000	0%	0%	100%	100%
Ending WIP	46,000	0%	0%	85%	35%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	33,000	35%	11,550	65%	21,450
From units started/Introduced	414,000	100%	414,000	100%	414,000
Total	447,000		425,550		435,450
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	46,000	85%	39,100	35%	16,100
Total EUP	493,000		464,650		451,550

.

STEP 3
Cost per Equivalent Units
	Material		Conversion cost		TOTAL
Cost incurred in Current Period	$ 1,711,200		$ 1,136,700		$ 2,847,900
Total Equivalent Units	464,650		451,550
Cost per Equivalent Units	$ 3.68		$ 2.52		$ 6.20