Question

Pureform, Inc., 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	86,000	$	84,000	$	41,900	$	55,600
Units started in process	819,000
Units transferred out	840,000
Work in process inventory, ending	65,000
Cost added during the month		$	1,111,425	$	516,500	$	686,025

       

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 weighted-average method of accounting for units and costs.

     

1.a

Compute the equivalent units for the month for the first department.

	Materials	Labor	Overhead
Equivalent units of production

b Determine the costs per equivalent unit for the month. (Round your answers to 2 decimal places.)

	Materials	Labor	Overhead
Cost per equivalent unit

  

Answer 1

1a) Compute the equivalent units for the month for the first department.

	Physical unit	%	EUP-material	%	EUP-labour	%	EUP-overhead
Unit transferred out	840000	100%	840000	100%	840000	100%	840000
Ending work in process	65000	70%	45500	50%	32500	50%	32500
Total	905000		885500		872500		872500

b) Determine the costs per equivalent unit for the month.

	Material	Labour	Overhead
Beginning work in process	84000	41900	55600
Cost added during period	1111425	516500	686025
Total cost	1195425	558400	741625
Equivalent unit	885500	872500	872500
Cost per equivalent unit	1.35	0.64	0.85