This answer uses a weighted average calculation for materials.
In order to determine the cost of the units in EWIP, we need to multiply the EUP in ending WIP for materials and conversion costs by the cost per unit for each element. Under the FIFO method of process costing we need to make three calculations to determine the EUP. These are: calculate (1) how many EUP were required to finish BWIP, (2) how many units were started and completed and (3) how many EUP were needed to start the EWIP. Direct materials: There were 16,000 units in BWIP and they were 60% complete for materials, meaning that they needed to do 40%, or 6,400 EUP to finish BWIP. There were a total of 76,000 units started and completed during the period (92,000 completed minus the 16,000 in BWIP). There were 24,000 units in EWIP that were 90% complete for materials, meaning that 21,600 EUP of materials had been done on the EWIP. Adding these three numbers together, we get 104,000 total equivalent units. Conversion costs: There were 16,000 units in BWIP and they were 20% complete for conversion costs, meaning that they needed to do 80%, or 12,800 EUP to finish BWIP. There were a total of 76,000 units started and completed during the period (92,000 completed minus the 16,000 in BWIP). There were 24,000 units in EWIP that were 40% complete for conversion costs, meaning that 9,600 EUP of conversion costs had been done on the EWIP. Adding these three numbers together, we get 98,400 units. Direct Conversion Materials Costs Completion of BWIP 6,400 12,800 Started & Completed 76,000 76,000 Starting of EWIP 21,600 9,600 TOTAL EUP-FIFO 104,000 98,400 In order to calculate the cost per equivalent unit of materials under FIFO we simply divide the costs added for materials this period by the total EUP for materials for the period. The cost added was $468,000, and the EUP for materials was 104,000. $468,000 divided by 104,000 total equivalent units gives a per unit cost for materials of $4.50. To calculate the cost per equivalent unit of conversion costs under FIFO we divide the costs added for conversion costs this period by the EUP for conversion costs for the period. The conversion costs added during the period were $182,880 in direct labor costs and $391,160 in overhead costs, for a total of $574,040. The conversion costs of $574,040 divided by the equivalent units of production for conversion costs of 98,400 equals the equivalent unit conversion cost of $5.83. The number of EUP for materials in ending WIP is 21,600 and the cost per EUP of materials was $4.50. This gives a total of $97,200 of materials in EWIP. There were 9,600 EUP of conversion costs in EWIP and the cost per EUP was $5.83. This is a total of $55,968 of conversion costs in EWIP. Added together, there are $153,168 in total costs in EWIP.
This answer uses a weighted average calculation for conversion costs.
This answer is the correct answer for the weighted average method.
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The beginning inventory was 60% complete for materials and 20% complete for conversion costs. The ending inventory was 90% complete for materials and 40% complete for conversion costs. Costs pertaining to the month of May are as follows: Beginning inventory costs are materials, $54,560; direct labor, $20,320; and factory overhead, $15,240. Costs incurred during May are materials used, $468,000; direct labor, $182,880; and factory overhead, $391,160. Using the FIFO method, the total cost of units in the ending work-in-process inventory at May 31 is