Question

Pureform, Inc., uses the weighted-average method in its process costing system. It manufactures a product that passes through two departments. Data for a recent month for the first department follow:

	Units	Materials		Labor		Overhead
Work in process inventory, beginning	64,000	$	64,800	$	27,900	$	34,600
Units started in process	609,000
Units transferred out	630,000
Work in process inventory, ending	43,000
Cost added during the month		$	1,321,774	$	417,165	$	357,570

The beginning work in process inventory was 85% complete with respect to materials and 70% complete with respect to labor and overhead. The ending work in process inventory was 65% complete with respect to materials and 25% complete with respect to labor and overhead.

Required:

Assume that the company uses the FIFO method in its process costing system.

1. Compute the first department's equivalent units of production for materials, labor, and overhead for the month.

2. Compute the first department's cost per equivalent unit for materials, labor, overhead, and in total for the month. (Round your answers to 2 decimal places.)

Answer 1

STEP 1
Reconciliation of Units
	Units	% already completed		% completed this period		% completed this period
		Material	Labor	Overhead	Material	Labor	Overhead
Beginning WIP	64,000	85%	70%	70%	15%	30%	30%
Units introduced	6,09,000
Total units to be accounted for	6,73,000
Completed and Transferred unit	6,30,000	0%	0%		100%	100%	100%
Ending WIP	43,000	0%	0%		65%	25%	25%

Requirement 1

STEP 2
Equivalent Units
	Total Units	Materials		Labor		Overheads
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	64,000	15%	9,600	30%	19,200	30%	19200
From units started/Introduced	5,66,000	100%	5,66,000	100%	5,66,000	100%	566000
Total	6,30,000		5,75,600		5,85,200		585200
	Total Units	Materials		Labor		Overheads
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	43,000	65%	27,950	25%	10,750	25%	10750
Total EUP	6,73,000		6,03,550		5,95,950		5,95,950

STEP 3
Cost per Equivalent Units
	Materials		Labor		Overheads
Cost incurred in Current Period	$            13,21,774.00		$                 4,17,165.00		$    3,57,570.00
Total Equivalent Units	$               6,03,550.00		$                 5,95,950.00		5,95,950
Cost per Equivalent Units	$                             2.19		$                               0.70		$                  0.60