Analyze Activity Variances-FIFO Process Costing: Fellite, Inc., manufactures foam padding for medical uses. The padding is produced in a continuous process. The company uses the FIFO process costing system for internal recordkeeping purposes. Since materials and conversion costs are added evenly throughout the process, it is not necessary to maintain separate accounts of materials and conversion costs for equivalent unit computations.

The master budget and actual results for the current period are reproduced as follows:

Required:

a. Compute the equivalent units of production this period. (Note: Equivalent unit computations are discussed in Chapter 8.)

b. Prepare a profit variance analysis like the one in Illustration 18-5.

Transcribed Image Text:

Physical count of units: Beginning work in process inventory Transferred to next department Ending inventory Actual 1,000 (80% complete) 2,500 units Master Budget 1,000 (50% complete) 3,200 units 600 (% complete) 800 (% complete) Current period costs: Direct materials $30,000 $32,500 Direct labor 24,600 27,000 Manufacturing overhead: Variable 16,200 14,500 Fixed 24,100 26,000