# Weatherly Lumber Company processes wood pulp for manufacturing various paper products. The company employs a process...

Weatherly Lumber Company processes wood pulp for manufacturing various paper products. The company employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. This is the company’s production schedule for May:

 Percent Completed Tons of Pulp Materials Conversion Work-in-Process Inventory, May 1 5,000 100 % 50 % Started during May 16,000 Units to account for 21,000 Units from beginning Work-in-Process, which were completed and transferred out during May 5,000 Started and completed during May 9,600 Work-in-Process Inventory, May 31 6,400 100 % 50 % Total units accounted for 21,000

The following cost data are available:

 Work-in-Process Inventory, May 1 Direct materials \$ 79,350 Conversion 25,728 Costs incurred during May Direct materials 253,920 Conversion 455,940

Required:

1. Calculate the equivalent units of direct materials and conversion during May. Use the FIFO method.

2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the *FIFO* method.

1) Equivalent unit

 Direct material Conversion Cost Beginning WIP 5000*0% = 0 5000*50% = 2500 Unit started and completed 9600 9600 Ending WIP 6400 6400*50% = 3200 Equivalent unit 16000 15300

2) Cost per equivalent unit

Direct material = 253920/16000 = 15.87

Conversion = 455940/15300 = 29.80

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