EXERCISE 4-6 Preparing a Quantity Schedule, Equivalent Units, and Cost per Equiv

Question

EXERCISE 4-6 Preparing a Quantity Schedule, Equivalent Units, and Cost per Equivalent Unit-Weighted Average Cost Method and FIFO Method [LO3-CC11 04-CC12, 13; L05-CC16; L06-CC17] Pureform, Inc. man department follow: ufactures a product that passes through two departments. Data for a recent month for the fine Materials Labour Overhead Units 5,000 45,000 42,000 8,000 $ 4,500 $ 1,250 S 1,875 Work in process, beginning Units started in process Units transferred out Work in process, ending Cost added during the month 52,800 21,500 32,250 The beginning work in process inventory was 80% complete as to materials and 60% complete as to processing labour and overhead. The ending work-in-process inventory was 75% complete as to materials and 50% comple as to processing labour and overhead. The company combines labour and overhead to form the conversion cos category

Explanation / Answer

1 Summery of Physical units and equivalent units calculation Units to be accounted for Phycal units Units in the beginning WIP inventory 5000 Units started during the period 45000 Total units to be accounted for 50000 Equivalent units Units accounted for Physical unit Material Labor Overhead Units completed and transferred out 42000 42000 42000 42000 Units in ending WIP inventory 8000 6000 4000 4000 Total units accounted for 50000 48000 46000 46000 Summery of costs to be accounted for Costs to be accounted for Materials Labor Overhead Total Cost in beginning WIP 4500 1250 1875 7625 Costs incurred during the period 2800 21500 32250 56550 Total costs to be accounted for 7300 22750 34125 64175 Calculation of costs per equivalent unit Materials Labor Overhead Total Total costs to be accounted for(a) 7300 22750 34125 64175 Total equivalent units accounted for(b) 48000 46000 46000 2 Cost per equivalent unit(a)/(b) 0.152083333 0.494565217 0.741847826 Assign costs to units transferred out and in Ending WIP Materials Labor Overhead TOTAL Costs assigned to units transferred out 6387.50 20771.74 31157.61 58316.85 Cost assigned to ending WIP 912.50 1978.26 2967.39 5858.15 7300.00 22750.00 34125.00 64175.00 3 FIFO METHOD Equivalent units Physical Unit Matreials labor overhead Beginning inventory 5000                         4,000 2500 2500 Units completed and transferred out 42000 Units started                    45,000 Units started and completed during the month 37000 37000 37000 37000 Beginning inventory completed 5000 1000 2500 2500 Total equivalent units completed during the month 38000 39500 39500 Ending inventory 8000 6000 4000 4000 Total equivalent units to be accounted 44000 43500 43500 Total cost incurred 2800 21500 32250 Cost per equivalent unit 0.063636364 0.494252874 0.741379

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