Question

Ibarra Corporation uses the FIFO method in its process costing system. The first processing department, the Forming Department, started the month with 16,500 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $24,250. An additional 102,000 units were started into production during the month and 105,000 units were completed and transferred to the next processing department. There were 13,500 units in the ending work in process inventory of the Forming Department that were 30% complete with respect to conversion costs. A total of $598,123 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:

Multiple Choice

• $5.85

• $5.66

• $5.17

• $5.87

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units					16,500
Add: Units Started in Process					102,000
Total Units to account for:					118,500
UNITS TO BE ACCOUNTED FOR:
Units from beginning WIP					16,500
Units started and completed					88,500
Ending Work in Process					13,500
Total Units to be accounted for:					118,500
Equivalent Units:
			UNITS	Conversion cost
				% Completion	Units
Units from beginning WIP			16500	80%	13,200
Units started and completed			88500	100%	88,500
Ending Work in Process			13500	30%	4,050
Total Equivalent units			118500		105,750
Cost per EUP:
Current conversion cost				598123
Total conversion cost				598123
Divide: Coinversion EUP				105750
Cost per EUP:				5.66
Answer is $ 5.66

answered by: anonymous