Equivalent Units and Product Cost ReportFIFO Method

In its first month of operations (May of 2019), Allred Companys Department 1 incurred charges of $72,000 for direct material (9,000 units), $38,700 for direct labor, and $13,500 for manufacturing overhead. At month-end, 8,500 units had been finished and transferred out. Those units remaining were finished with respect to material but only 40% finished with respect to conversion.

Assuming Allred uses the FIFO method and that materials are added at the beginning of the process and conversion costs are incurred evenly throughout the period, compute the following:

1. The equivalent units for materials and conversion costs.

2. The cost per equivalent unit for materials and conversion costs.

3. The total cost assigned to the units transferred out.

4. The total cost assigned to the ending inventory.

5. Prove that your solutions to requirements (c) and (d) sum to the total costs to be accounted for.

Allred Company, Department 1 Equivalent Units Calculations, May 2019
		Equivalent Units
		% in May	Direct Materials	% in May	Conversion Costs
Complete/Transferred
Beginning inventory	Answer	Answer	Answer	Answer	Answer
Started & completed	Answer	Answer	Answer	Answer	Answer
Ending inventory	Answer	Answer	Answer	Answer	Answer
Total	Answer		Answer	a.	Answer	a.

Product Cost Report
			Direct Materials		Conversion Costs
Beginning Inventory	Answer		Answer		Answer
Current	Answer		Answer		Answer
Total Costs to Account For	Answer		Answer		Answer
Total Equivalent Units			Answer		Answer
Average cost / Equivalent unit			Answer	b.	Answer	b.
Beginning inventory
Costs incurred in Month 0	Answer
Costs incurred in Month 1	Answer
Started and finished	Answer
Cost of Goods Manufactured	Answer	c.
Ending Inventory:
Direct Materials	Answer
Conversion costs	Answer
Cost of Ending Inventory	Answer	d.
Total Costs Allocated	Answer	e.