Question

Hana Inc. is a food manufacturing company that has three departments (Mixing, Baking, and Packaging departments)...

Hana Inc. is a food manufacturing company that has three departments (Mixing, Baking, and Packaging departments) used to produce their most popular product – O Cereal. Data for the Mixing Department for the month of November 2019 follow:

Work-in-process, November 1 —1,000 units

      70% complete for direct materials; 40% completed for conversion costs

      Actual costs of direct materials, $124,000

      Actual costs of conversion, $80,400

Units started during November,              3,000

Units completed during November         3,500

Work-in-process, November 30                 500 units

    80% complete for direct materials; 50% completed for conversion costs

    Actual costs of direct materials added during November, $260,000

    Actual conversion costs added during November,           $201,000

Currently, Hana Inc. uses the FIFO method to account for inventories.

SHOW ALL CALCULATIONS. ROUND TO THE NEAREST $0.01. DON’T FORGET UNITS

A. Calculate the equivalent units of work for the month of November for Direct Materials

B. Calculate the equivalent units of work for the month of November for Conversion Costs

C. Calculate the cost per equivalent unit of work done during November for Direct Materials

D. Calculate the cost per equivalent unit of work done during November for Conversion Costs

Business   Accounting   
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Answer #1

Equivalent units under FIFO METHOD

Particular material conversion
Units completed and transferred out 3500 units
Beginning inventory 1000

(1000×30%)

300

(1000×60%)

600
Units started during the month 2500

(2500×100%)

2500

(2500×100%)

2500
Ending inventory

(500×80%)

400

(500×50%)

250
Total equivalent units 3200 3350

Cost per Equivalent unit

Particular material conversion
(a) cost added during the month $260000 $201000
(b) equivalent units 3200 3350
Cost per Equivalent unit (a/b) $81.25 $60
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