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 (50,000 units, 100% complete for direct materials, 40% complete with respect to conversion costs; includes $70,500 of direct material cost; $34,050 of conversion costs).

Units started in May 225,000
Units completed in May 200,000

Work in Process, May 31 (75,000 units, 100% complete for direct materials; 20% complete for conversion costs).

Costs incurred in May
Direct materials $342,000
Conversion costs $352,950

If Pitt Enterprises uses the FIFO method of process costing, compute the equivalent units for materials and conversion costs respectively for May.

Answer 1

Pitts Enterprises

Materials Conversion

The equivalent units = 225,000 195,000

Step-by-step explanation:

a) Data and Calculations:

Units Materials Conversion Total

Work in Process, May 1 50,000 100% 40%

Units started in May 225,000

Units completed 200,000

Work in Process, May 31 75,000 100% 20%

Costs of Work in Process $70,500 $34,050 $104,550

Costs incurred in May 342,000 352,950 694,950

Equivalent units:

Units Materials Conversion

Work in Process, May 1 50,000 0 (100%) 30,000 (60%)

Units started and

completed in May 150,000 150,000 (100%) 150,000 (100%)

Work in Process, May 31 75,000 75,000 (100%) 15,000 (20%)

Total equivalent units 225,000 195,000