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Compute for the cost equivalent unit for direct material

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Reference no: EM132715568

1. AAA Inc. provided the following data for the year ended December 31, 2019.

a. The 30,000 WIP inventory on January 1, 2019 is 40% com,plete as regards to conversion cost while the 20,000 WIP inventory on December 31, 2019 is 90% incom,plete as regards conversion cost.

b. The total units started during the year amounted to 60,000 units. There is no spoilage during the period.

c. It is the company's policy to apply direct labor and factory overhead uniformly throughout the period while ¾ of direct materials are added at the start of the process while the remaining direct materials are added at the end of the process.

d. The cost of January 1, 2019 WIP consists of P200,000 direct material, P300,000 direct labor and P500,000 factory overhead.

e. The total manufacturing cost for the year consisted of P1M direct material, P3M direct labor and P4M factory overhead.

Problem 1: Compute for the cost equivalent unit for direct material and conversion cost respectively, using the following methods:

a. FIFO Method

b. Weighted Average Method

Reference no: EM132715568

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