Question

Pitt Enterprises manufactures jeans. All materials are introduced at the beginning of the manufacturing process in...

Pitt Enterprises manufactures jeans. All materials are introduced at the beginning of the manufacturing process in the Cutting Department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Information for the Cutting Department for the month of May follows.

Work in Process, May 1 (54,000 units, 100% complete for direct materials, 70% complete with respect to conversion costs; includes $70,900 of direct material cost; $34,220 of conversion costs).

Units started in May 120,000
Units completed in May 138,000


Work in Process, May 31 (36,000 units, 100% complete for direct materials; 60% complete for conversion costs).

Costs incurred in May
Direct materials $ 342,400
Conversion costs $ 353,350


If Pitt Enterprises uses the FIFO method of process costing, compute the equivalent units for direct materials and conversion respectively for May.

Multiple Choice

  • 120,000 materials; 121,800 conversion.

  • 174,000 materials; 159,600 conversion.

  • 84,000 materials; 84,000 conversion.

  • 121,800 materials; 120,000 conversion.

  • 121,800 materials; 121,800 conversion.

Homework Answers

Answer #1

Solution:

Pitt Enterprises
Cutting Department
Computation of Equivalent unit (FIFO)
Particulars Physical units Material Conversion
Units to be accounted for:
Beginning WIP Inventory 54000
Units started this period 120000
Total unit to be accounted for 174000
Units Accounted for:
Units completed and transferred out
From beginning inventory
Material - 0%
Conversion - 30%
54000 0 16200
Started and completed currently 84000 84000 84000
Transferred to finished goods 138000 84000 100200
Units in ending WIP
Material - 100%
Conversion - 60%
36000 36000 21600
Total units accounted for 174000 120000 121800

Hence first option is correct.

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