LMN Pharmaceuticals

Scenario: Analyze Process Costs

Data:

• Production Data:
  • Units Started: 10,000 units
  • Units Completed: 8,000 units
  • Ending Work in Process: 2,000 units

• Cost Information:
  • Total Manufacturing Costs: $150,000

Requirements:

1. Calculate the equivalent units of production for direct materials and conversion costs.
2. Compute the cost per equivalent unit for direct materials and conversion costs.
3. Allocate the total manufacturing costs between units completed and ending work in process.
4. Discuss the advantages and challenges of process costing for LMN Pharmaceuticals.