Pitt Enterprises manufactures jeans. All materials are introduced at the beginni
ID: 2560919 • Letter: P
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 (56,000 units, 100% complete for direct materials, 40% complete with respect to conversion costs; includes $82,500 of direct material cost; $46,050 of conversion costs).
Work in Process, May 31 (81,000 units, 100% complete for direct materials; 20% complete for conversion costs).
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
$1.76; $1.95.
$0.80; $3.13.
$3.13; $0.70.
$3.13; $3.13.
$4.02; $4.02.
Units started in May 237,000 Units completed in May 212,000Explanation / Answer
Answer is $ 1.76 and $ 1.95
The explanation is as follows:
Statement Showing Equivalent Units Input Particulars Output Material Equivalent Units Conversion Cost Equivalent Units Units % Completion Units % Completion 56,000 Opening WIP 237,000 Units Input Completed from Beginning WIP 56000 0 0 33600 60% Completed and transferred out 156,000 156,000 100% 156,000 100% Closing WIP 81,000 81,000 100% 16200 20% 293,000 Total 293,000 237,000 205,800 Statement Showing Cost per unit Elements Equivalent Units Current Cost Cost Per Eq. Units Material 237,000 417120 1.76 Conversion 205,800 401310 1.95 Total Cost per unit 3.71