Question

The Fields Company has two manufacturing departments, forming and painting. The company uses the weighted-average method of process costing. At the beginning of the month, the forming department has 37,000 units in inventory, 80% complete as to materials and 20% complete as to conversion costs. The beginning inventory cost of $84,100 consisted of $59,200 of direct materials costs and $24,900 of conversion costs.

During the month, the forming department started 540,000 units. At the end of the month, the forming department had 40,000 units in ending inventory, 80% complete as to materials and 30% complete as to conversion. Units completed in the forming department are transferred to the painting department.

Cost information for the forming department is as follows:

Beginning work in process inventory	$	84,100
Direct materials added during the month		1,949,370
Conversion added during the month		1,254,270

Part 1. Calculate the equivalent units of production for the forming department.

Part 2. Calculate the costs per equivalent unit of production for the forming department.

Direct Materials		per EUP
Conversion		per EUP

Answer 1

Part-1
Units completed and transferred out = 37000+540000-40000= 537000
Equivalent units of production (EUP)- weighted average method
	Units	%Materials	EUP-Materials	%Conversion	EUP-Conversion
Units completed and transferred out	537000	100%	537000	100%	537000
Ending work in process	40000	80%	32000	30%	12000
Total units	577000		569000		549000
	Equivalent units
Direct Materials	569000
Conversion	549000
Part-2
Cost per equivalent unit of production	Materials	Conversion
Cost of beginning work in process	59200	24900
Costs incurred this period	1949370	1254270
Total costs	2008570	1279170
÷ Equivalent units of production	569000	549000
Cost per equivalent unit of production	3.53	2.33
Direct Materials	3.53	per EUP
Conversion	2.33	per EUP