Question

During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 66,000 were in process in the production department at the beginning of April and 264,000 were started and completed in April. April's beginning inventory units were 65% complete with respect to materials and 35% complete with respect to conversion. At the end of April, 88,000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to conversion.

Part 1. Prepare the number of equivalent units with respect to both materials used and conversion costs in the production department for April using the FIFO method.

Equivalent Units of Production - FIFO
	Units	% Materials	EUP- Materials	% Conversion	EUP-Conversion
Equivalent units of production

Part 2. The production department had $918,775 of direct materials and $723,261 of conversion costs charged to it during April. Also, its beginning inventory of $185,284 consists of $142,285 of direct materials cost and $42,999 of conversion costs.

Part 3. Using the FIFO method, prepare the direct materials cost and the conversion cost per equivalent unit and assign April's costs to the department’s output.

Answer 1

Part 1. Prepare the number of equivalent units with respect to both materials used and conversion costs in the production department for April using the FIFO method.

	Equivalent Units of Production - FIFO Units % Materials EUP- Materials % Conversion EUP-Conversion Beginning Work in process 66000 35% 23100 65% 42900 Unit started and completed 264000 100% 264000 100% 264000 Ending work in process 88000 80% 70400 30% 26400 Equivalent units of production 418000 357500 333300

2) Cost per equivalent unit

	Direct material	Conversion
Cost added	918775	723261
Equivalent unit	357500	333300
Cost per equivalent unit	2.57	2.17

3) Cost of the department's output = (287100*2.57+306900*2.17)+185284 = $1589104