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 progress inventory, beginninging 5,000 $4,320 $1,040 $1,790

Units started in progress 45,000

Units transfered out 42,000

Work in process inventory, ending 8,000

Cost added during the month $52,800 $21,500 $32,250

The beginning work in process inventory was %80 complete with respect to materials and %60 complete with respect to labor and overhead. The ending work in progress inventory was 75% complete with respect to materals and 50% complete with respect to labor and over head.

1) Complete the equivilent units for the first deparment.

Equivilent units of production:

2) Determine the costs per equivalent unit for the month

Materials Labor Overhead

Cost per equivalent unit

Answer 1

Solution 1:

Computation of Equivalent units (FIFO)
Particulars	Physical units	Material	Labor	Overhead
Units to be accounted for:
Beginning WIP Inventory	5000
Units Started	45000
Total unit to be accounted for	50000
Units Accounted for:
Units completed and transferred out:
From beginning inventory Material - 20% Labor and overhead- 40%	5000	1000	2000	2000
Started and completed currently	37000	37000	37000	37000
Units in ending WIP Material - 75% Labor and Overhead- 50%	8000	6000	4000	4000
Total Equivalent units	50000	44000	43000	43000

Pureform, Inc.
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Labor	Overhead
Current period cost	$106,550.00	$52,800.00	$21,500.00	$32,250.00
Equivalent units		44000	43000	43000
Cost per equivalent unit		$1.20	$0.50	$0.75