Question

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

Answer 1

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