Question

The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day:

Beginning WIP inventory
Direct materials	$	970
Conversion costs		512
Current period costs
Direct materials		21,510
Conversion costs		15,561

Quantity information is obtained from the manufacturing records and includes the following:

Beginning inventory	650	units	(60% complete as to materials, 56% complete as to conversion)
Current period units started	5,600	units
Ending inventory	1,800	units	(40% complete as to materials, 20% complete as to conversion)

6.

value:
10.00 points

Required information

Required:

(1) Compute the equivalent units for the materials and conversion cost calculations.

(2) Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. (Round your answers to 2 decimal places.)

Answer 1

(1) Compute the equivalent units for the materials and conversion cost calculations.

	Physical unit	%	EUP-material	%	EUP-conversion
Beginning work in process	650	40%	260	44%	286
Units started and completed	3800	100%	3800	100%	3800
Ending inventory	1800	40%	720	20%	360
Total	6250		4780		4446

(2) Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method

	Material	Conversion
Cost added during period	21510	15561
Equivalent unit	4780	4446
Cost per equivalent unit	4.50	3.50