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A department uses the FIFO method of process costing. All direct materials are added at the...

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Accounting

A department uses the FIFO method of process costing. All directmaterials are added at the beginning of the process. Thisdepartment has the following data for this month.

  • 200 units in beginning WIP (51% complete with respect toconversion costs).
  • 10,652 units started
  • 123 units in ending WIP (36% complete with respect toconversion costs).
  • $1,411 beginning WIP direct materials costs
  • $2,481 beginning WIP conversion costs
  • $107,056 current month direct materials costs
  • $87,452 current month conversion costs

What is the department's direct material cost per equivalentunit for this month (round final answer to nearest cent ifnecessary)?

Answer & Explanation Solved by verified expert
4.2 Ratings (615 Votes)

Answer-------------Department's direct material cost per equivalent unit for this month= $10.05

Working

STEP 1 (FIFO)
Reconciliation of Units
Units % already completed % completed this period
Material Conversion cost Material Conversion cost
Beginning WIP                   200 100% 51% 0% 49%
Units introduced             10,652
Total units to be accounted for             10,852
Completed and Transferred unit             10,729 0% 0% 100% 100%
Ending WIP                   123 0% 0% 100% 36%

.

STEP 2 (FIFO)
Equivalent Units
Total Units Material Conversion cost
Units Transferred: % completed this period Equivalent Units % completed this period Equivalent Units
From WIP                   200 0%                             -   49%                                98
From units started/Introduced             10,529 100%                   10,529 100%                        10,529
Total             10,729                   10,529                        10,627
Total Units Material Conversion cost
Ending WIP % completed this period Equivalent Units % completed this period Equivalent Units
Total                   123 100%                         123 36%                                44
Total EUP             10,852                   10,652                        10,671

.

Material
Cost incurred in Current Period $ 107,056
Total Equivalent Units 10,652
Cost per Equivalent Units $ 10.05

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