Question

Overboard Corporation uses the FIFO method in its process costing system. In the Cutting Department in June, units were 80% complete with respect to conversion in the beginning work in process inventory and 25% complete with respect to conversion in the ending work in process inventory. Other data for the department for June follow:

	Units	Conversion Cost
Beginning work in process inventory	23,900	$	42,000
Units started into production, and costs incurred during the month	163,000	$	243,000
Units completed and transferred out	143,000

The cost per equivalent unit for conversion cost is closest to:

Answer 1

Cost per equivalent unit of conversion cost is $ 1.80 per equivalent unit
UNITS TO ACCOUNT FOR:
Beginning Work in Process units				23,900
Add: Units Started in Process				163,000
Total Units to account for:				186,900
UNITS TO BE ACCOUNTED FOR:
Units completed from begin. Inv				23900
Units started and completed				119,100
Ending Work in Process				43,900
Total Units to be accounted for:				186,900
Equivalent Units:
			Conversion
			% Completion	Units
Units completed from Beg WIP			20%	4780
Units started and completed			100%	119,100
Ending Work in Process			25%	10,975
Total Equivalent units				134,855
COST PER EQUIVALENT UNIT:
			Conversion
Total cost added during the month			243,000
Equivalent Units			134,855
Cost per Equivalent unit			1.8