Pureform, Inc., uses the weighted-average method in its process costing system. It manufactures a product that passes through two departments. Data for a recent month for the first department follow: Units Materials Labor Overhead
Work in process inventory, beginning 65,000 $ 68,500 $ 5,700 $ 21,400
Units started in process 617,000
Units transferred out 610,000
Work in process inventory, ending 72,000
Cost added during the month $ 905,900 $ 70,524 $ 264,440
The beginning work in process inventory was 75% complete with respect to materials and 60% complete with respect to labor and overhead. The ending work in process inventory was 55% complete with respect to materials and 35% complete with respect to labor and overhead.

Required:

1. Compute the first department's equivalent units of production for materials, labor, and overhead for the month.

2. Determine the first department's cost per equivalent unit for materials, labor, and overhead for the month. (Round your answers to 2 decimal places.)

Part 1

The first department's equivalent units :

Materials  = 649,600 units

Labor = 635,200 units

Overheads = 635,200 units

Part 2

The first department's cost per equivalent unit :

Materials  = $1.50

Labor = $0.12

Overheads = $0.45

Explanation:

It is important to note that the weighted-average method is being used in Pureform, Inc process costing system.

This method focuses on the units completed and transferred and units in closing work in process to calculate the equivalent units of production.

The total cost on which to base the unit cost comprises of cost in Opening Work In Process and the Manufacturing cost incurred during the production period

The first department's equivalent units

Equivalent units = Units Completed and transferred + Units in Closing Work in Process × Percentage of Completion

Therefore,

Materials  = 610,000 + 72,000 × 55% = 649,600 units

Labor =  610,000 + 72,000 × 35% = 635,200 units

Overheads =  610,000 + 72,000 × 35% = 635,200 units

The first department's cost per equivalent unit for materials, labor, and overhead

Cost per equivalent unit = Total Cost ÷ Total Equivalent Units

Therefore,

Materials = ($ 68,500 + $ 905,900) ÷ 649,600 units

               = $1.50

Labor = ($ 5,700 + $ 70,524) ÷ 635,200 units

               = $0.12

Overheads = ($ 21,400 + $ 264,440) ÷ 649,600 units

               = $0.45

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