Question

Refer to the information in Exercise 16-6. Assume that Fields uses the FIFO method of process costing.

1. Calculate the equivalent units of production for the forming department.

2. Calculate the costs per equivalent unit of production for the forming department.

Short answer

1. Equivalent units:

Material:334,000 Units
Conversion:324,000 Units

1. Cost per equivalent unit:

Material:$3.82 per equivalent unit
Conversion:$2.81 per equivalent unit

Step-by-step solution

Definition of Equivalent Units of Production

Equivalent units of production can be defined as the metric that calculates the work done by the business entity on the goods that are not completed during the period. In this metric, the finished and semi-finished goods are represented in terms of finished goods.

Calculation of equivalents units for the forming department

Particular	Material
Beginning inventory	10,000
Units started and completed	300,000
Less: Ending inventory	24,000
Equivalent units	334,000

Particular	Conversion
Beginning inventory	15,000
Units started and completed	300,000
Less: Ending inventory	9,000
Equivalent units	324,000

Calculation of cost per equivalent units

For material:

Particular	Amount $
Beginning inventory	$44,800
Added during the year	1,231,200
Total cost	$1,276,000
Equivalent units	334,000
Cost per equivalent unit	$3.82

For conversion:

Particular	Amount $
Beginning inventory	$15,300
Added during the year	896,700
Total cost	$912,000
Equivalent units	324,000
Cost per equivalent unit	$2.81