Exercise 2 Refer to the following information about the Finishing Department in

Question

Exercise 2
Refer to the following information about the Finishing Department in the Davidson Factory for the month of June. Davidson Factory uses the FIFO method of inventory costing.

Beginning Work in Process inventory:
Physical units…………………………………………... 5,000 units
% complete for materials………………………………. 70%
% complete for labor and overhead……………………. 25%
Materials cost from May……………………………….. $7,350
Labor and overhead cost from May……………………. $3,125
Product started and completed:
Physical units…………………………………………… 40,000 units
Ending Work in Process inventory:
Physical units………………………………………….... 4,000 units
% complete for materials………………………………. 40%
% complete for labor and overhead ……………………. 10%
Manufacturing costs for June:
Materials………………………………………………… $96,975
Labor and overhead……………………………………... $79,470

Compute equivalent units for direct materials, direct labor and overhead for June.

Explanation / Answer

Calculate equivalent unit :

Physical unit % EUP-material % EUP-labour % EUP-overhead Beginning work in process 5000 70% 3500 25% 1250 25% 1250 Units started and completed 36000 100% 36000 100% 36000 100% 36000 Ending work in process 4000 40% 1600 10% 400 10% 400 Total 45000 41100 37650 37650

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