Question

Problem 6

Luxemburg Corporation produces medical grade isotopes.Theisotopes are produced in single continuous process and Luxemburguses de FIFO process costing method of accounting forproduction.

The production process requires constant utilization offacilities and equipment, as well as direct labor by skilledtechnicians.As a result, direct labor and factory overhead are bothdeemed to be introduced uniformly throughout production.

Luxemburg Corporation prepared the following “unitreconciliation” for the month of April:

UNIT RECONCILIATION
		QUANTITY SCHEDULE
Beginning Work in Process		7,500
Started into Production		9,000
Total Units into Production		16,500		EQUIVALENT UNITS CALCULATIONS:
						CONVERSION
				DIRECT MATERIALS		DIRECT LABOR		FACTORY OVERHEAD
				2,250		2,625		2,625
				4,500		4,500		4,500
				3,150		2,250		2,250
To Finished Goods				9,900		9,375		9,375
From beginning WIP		7,500
Started and Completed		4,500
Ending Work in Process		4,500
Total Units Reconciled		16,500

The above beginning work in process inventory had an assignedcost of $4,500,000, divided between direct materials (30%), directlabor (35%), and factory overhead (35%).

Additional costs incurred during April were $15,000,000, dividedbetween direct materials (15%), direct labor (20%), and factoryoverhead (65%).

Prepare a schedule showing the calculation of cost perequivalent unit.

WORKSHEET # 6

COST PER EQUIVALENT UNIT:

				CONVERSION
		TOTAL COST		DIRECT MATERIALS		DIRECT LABOR		FACTORY OVERHEAD
Beginning Work in Process
Cost incurred during period
Total cost
Equivalent units
Cost per equivalent unit