Chapter 6, Problem 23E

Using the same data found in Exercise 6.22, assume the company uses the FIFO method.

Required:

Prepare a schedule of equivalent units, and compute the unit cost for the month of December.

Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was $40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments.

The second department (Polishing) had the following physical flow schedule for December:

Costs in beginning work in process for the Polishing Department were direct materials, $5,000; conversion costs, $6,000; and transferred in, $8,000. Costs added during the month: direct materials, $32,000; conversion costs, $50,000; and transferred in, $40,000.