Question

In: Accounting

Johnson Company adds materials, 50% at the start of the process and 50% at the end...

Johnson Company adds materials, 50% at the start of the process and 50% at the end of the process in Department A. Conversion costs were 70% complete as to the 8,000 units in process on January 1 and 50% as to the 6,000 units in process on January 31. During the month of January, 12,000 units were transferred to Department B. An analysis of the costs relating to Work in Process is as follows:

Work in process, 1/1

                Materials, P12,000; Conversion costs, P25,000

Costs added during the month:

                Materials, P63,030; Conversion costs, P105,750

Using FIFO Method, the total unit cost per EUP is?

Solutions

Expert Solution

Correct answer-----------

Material Conversion TOTAL
Cost per Equivalent Units $ 5.73 $ 11.25 $ 16.98

Working

STEP 1 (FIFO)
Reconciliation of Units
Units % already completed % completed this period
Material Conversion Material Conversion
Beginning WIP         8,000 50% 70% 50% 30%
Units introduced       10,000
Total units to be accounted for       18,000
Completed and Transferred unit       12,000 0% 0% 100% 100%
Ending WIP         6,000 0% 0% 50% 50%

..

STEP 2 (FIFO)
Equivalent Units
Total Units Material Conversion
Units Transferred: % completed this period Equivalent Units % completed this period Equivalent Units
From WIP         8,000 50%           4,000 30%                          2,400
From units started/Introduced         4,000 100%           4,000 100%                          4,000
Total       12,000           8,000                          6,400
Total Units Material Conversion
Ending WIP % completed this period Equivalent Units % completed this period Equivalent Units
Total         6,000 50%           3,000 50%                          3,000
Total EUP       18,000         11,000                          9,400

..

STEP 3
Cost per Equivalent Units AND Cost to be accounted for
Material Conversion TOTAL
Cost incurred in Current Period $ 63,030 $ 105,750 $ 168,780
Total Equivalent Units                                        11,000                                                                     9,400
Cost per Equivalent Units $ 5.73 $ 11.25 $ 16.98

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