Question

The following information pertains to the Moline Facility for the month of May (all materials are...

The following information pertains to the Moline Facility for the month of May (all materials are added at the beginning of the process):

Units Material Costs
Beginning work in process 90,000 $ 34,000
Started in May 270,000 102,000
Units completed 270,000
Ending work in process 90,000

Required:

Compute the cost per equivalent unit for materials using the FIFO method. (Round "Cost per equivalent unit" answer to 2 decimal places.)

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Answer #1

In the given question, we have to calculate cost per equivalent unit for material using FIFO Method

Statement for equivalent unit by FIFO Method

Particular    physical unit % completion Eq. unit

Beginning inventory 90000 0% 0

Unit started and comp. 180000 100% 180000

Ending inventory 90000 100 % 90000

Total 270000

Now we can calculate cost per equivalent unit for material

= cost incurred during the month ÷ equivalent unit

= $102000 ÷ 270000

= $0.38

Thus the correct answer is cost per equivalent unit = $0.38

Note material are added at the beginning of the process so they are 100 % complete. For ending inventory and 0% for beginning inventory.

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