Pureform, Inc., manufactures a product that passes through two departments. Data

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

Explanation / Answer

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

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