Step 3: Compute the Cost per Equivalent Unit

The calculation for cost per equivalent unit is a simple calculation:

Manufacturing Costs

Equivalent Units

Under the weighted average method, the numerator is the sum of the manufacturing costs in BWIP and the manufacturing costs for the period. Under the FIFO method, the beginning inventory costs are excluded from this calculation. The numerator is the manufacturing costs for the current period only. Equivalent units for the period were computed in step 2.

APPLY THE CONCEPTS: Step 3 Recall that the BWIP had costs of $14,304. During May, In the Doghouse incurred $96,000 in manufacturing costs. Complete the formula and cost per equivalent unit for the weighted average method and for the FIFO method to the below. If required, round the cost per equivalent unit amount to the nearest cent.

Compute the Weighted Average Cost per Equivalent Unit for May

Weighted Average Cost per Equivalent Unit =	$
=	$

Compute the FIFO Cost per Equivalent Unit for May

FIFO Cost per Equivalent Unit =
=	$