Question

1. A department uses the FIFO method of process costing. All direct materials are added at the beginning of the process. This department has the following data for this month.

   • 214 units in beginning WIP (73% complete with respect to conversion costs).
   • 8,477 units started
   • 119 units in ending WIP (67% complete with respect to conversion costs).
   • $2,087 beginning WIP direct materials costs
   • $1,702 beginning WIP conversion costs
   • $112,915 current month direct materials costs
   • $92,268 current month conversion costs

   What is the department's conversion cost per equivalent unit for this month (round final answer to nearest cent if necessary)?

Answer 1

Solution ---------Department's conversion cost per equivalent unit for this month= $10.86

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	214	100%	73%	0%	27%
Units introduced	8,477
Total units to be accounted for	8,691
Completed and Transferred unit	8,572	0%	0%	100%	100%
Ending WIP	119	0%	0%	100%	67%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	214	0%	-	27%	58
From units started/Introduced	8,358	100%	8,358	100%	8,358
Total	8,572		8,358		8,416
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	119	100%	119	67%	80
Total EUP	8,691		8,477		8,496

.

	Conversion cost
Cost incurred in Current Period	$ 92,268
Total Equivalent Units	8,496
Cost per Equivalent Units	$ 10.86