Question

Pitt Enterprises manufactures jeans. All materials are introduced at the beginning of the manufacturing process in the Cutting Department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Information for the Cutting Department for the month of May follows. Work in Process, May 1 (59,000 units, 100% complete for direct materials 35% complete with respect to conversion costs; includes $88,500 of direct material cost; $52,050 of conversion costs). Units started in May 243,000 Units completed in May 218,000 Work in Process, May 31 (84,000 units, 100% complete for direct materials; 20% complete for conversion costs) Costs incurred in May Direct materials Conversion costs $456,840 $ 428,300 If Pitt Enterprises uses the FIFO method of process costing, compute the cost per equivalent unit for direct materials and conversion costs respectively for May Multiple Choice $1.88; $2.00. 45U,840 S0.79; $2.88. $2.88: $0.70. $2.88; $2. 88. $4.41; $4.41.

Answer 1

Answer:

$1.88; $2.00

Explanation:

Equivalent Units Produced for direct material:

= Opening Work In Progress + Introduced + Closing units

= units × Degree of completion

= (59,000 × 0%) + (159,000 × 100%) + (84,000 × 100%)

= 0 + 159,000 + 84,000

= 243,000

Equivalent Units Produced for conversion costs:

= Opening Work In Progress + Introduced + Closing units

= Units × Degree of completion

= (59,000 × 65%) + (159,000 × 100%) + (84,000 × 20%)

= 38,350 + 159,000 + 16,800

= 214,150

Cost Per Equivalent Units for direct material:

= Total Cost Incurred ÷ Equivalent Units Produced

= $456,840 ÷ 243,000

= $1.88

Cost Per Equivalent Units for conversion cost:

= Total Cost Incurred ÷ Equivalent Units Produced

= $428,300 ÷ 214,150

= $2.00