Question

Fields Company has two manufacturing departments, forming and painting. The company uses the weighted avera method of process costing. At the beginning of the month, the forming department has 32,000 units in inventory, 80 complete as to materials and 20% complete as to conversion costs. The beginning inventory cost of $74,100 consis $53,200 of direct materials costs and $20,900 of conversion costs. During the month, the forming department started 440,000 units. At the end of the month, the forming department 40,000 units in ending inventory, 90% complete as to materials and 40% complete as to conversion. Units complete the forming department are transferred to the painting department. Cost information for the forming department follows. $ Beginning work in process inventory Direct materials added during the month Conversion added during the month 74,100 1,650,320 1,099, 100 Assume that Fields uses the FIFO method of process costing. 1. Calculate the equivalent units of production for the forming department. 2. Calculate the costs per equivalent unit of production for the forming department.

Answer 1

Requirement 1

	Material	Conversion
Equivalent Units of Production	4,42,400	4,41,600

.

	Material	Conversion
Cost per equivalent Unit	$             3.73	$                   2.49

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	32,000	80%	20%	20%	80%
Units introduced	4,40,000
Total units to be accounted for	4,72,000
Completed and Transferred unit	4,32,000	0%	0%	100%	100%
Ending WIP	40,000	0%	0%	90%	40%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	32,000	20%	6,400	80%	25,600
From units started/Introduced	4,00,000	100%	4,00,000	100%	4,00,000
Total	4,32,000		4,06,400		4,25,600
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	40,000	90%	36,000	40%	16,000
Total EUP	4,72,000		4,42,400		4,41,600

.

STEP 3
Cost per Equivalent Units
	Material		Conversion cost		TOTAL
Cost incurred in Current Period	$ 1,650,320		$ 1,099,100		$ 2,749,420
Total Equivalent Units	4,42,400		4,41,600
Cost per Equivalent Units	$ 3.73		$ 2.49		$ 6.22