Question

In: Accounting

A department uses the FIFO method of process costing. All direct materials are added at the...

A department uses the FIFO method of process costing. All direct materials are added at the beginning of the process. This department has the following data for this month.

  • 114 units in beginning WIP (31% complete with respect to conversion costs).
  • 8,068 units started
  • 198 units in ending WIP (27% complete with respect to conversion costs).
  • $1,781 beginning WIP direct materials costs
  • $2,377 beginning WIP conversion costs
  • $100,870 current month direct materials costs
  • $104,747 current month conversion costs

What is the department's direct material cost per equivalent unit for this month (round final answer to nearest cent if necessary)?

Please explain

Solutions

Expert Solution

Answer-------------Department's direct material cost per equivalent unit for this month= $12.50

Working

STEP 1 (FIFO)
Reconciliation of Units
Units % already completed % completed this period
Material Conversion cost Material Conversion cost
Beginning WIP                   114 100% 31% 0% 69%
Units introduced               8,068
Total units to be accounted for               8,182
Completed and Transferred unit               7,984 0% 0% 100% 100%
Ending WIP                   198 0% 0% 100% 27%

.

STEP 2 (FIFO)
Equivalent Units
Total Units Material Conversion cost
Units Transferred: % completed this period Equivalent Units % completed this period Equivalent Units
From WIP                   114 0%                             -   69%                                79
From units started/Introduced               7,870 100%                      7,870 100%                          7,870
Total               7,984                      7,870                          7,949
Total Units Material Conversion cost
Ending WIP % completed this period Equivalent Units % completed this period Equivalent Units
Total                   198 100%                         198 27%                                53
Total EUP               8,182                      8,068                          8,002

.

Material
Cost incurred in Current Period $ 100,870
Total Equivalent Units 8,068
Cost per Equivalent Units $ 12.50

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