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	91,000	$	92,400	$	47,900	$	62,400
Units started in process	869,000
Units transferred out	890,000
Work in process inventory, ending	70,000
Cost added during the month		$	1,628,490	$	479,780	$	531,185

The beginning work in process inventory was 90% complete with respect to materials and 75% complete with respect to labor and overhead. The ending work in process inventory was 70% complete with respect to materials and 50% 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

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

	Physical unit	%	material	%	labour	%	Overhead
Beginning work in process	91000	10%	9100	25%	22750	25%	22750
Unit started & Completed	799000	100%	799000	100%	799000	100%	799000
Ending work in process	70000	70%	49000	50%	35000	50%	35000
Total equivalent unit			857100		856750		856750

2. Compute the first department's cost per equivalent unit for materials, labor, overhead, and in total for the month.

	Material	Labour	Overhead	Total
Cost added during period	1628490	479780	531185
Equivalent unit	857100	856750	856750
Cost per equivalent unit	1.90	0.56	0.62	3.08