Question

Sparky Corporation uses FIFO method of process costing. The following information is available for February in its molding Department.

Units

Beginning Inventory 44,000 units, 100% complete as to materials and 55% complete as to conversion.

Units started and completed: 129,000

Units completed and transferred out: 173,000.

Ending inventory  39,500 units, 100% complete as to materials and 35% complete as to conversion.

Costs:

Costs in beginning Work in process - direct materials; $62,000.

Costs in beginning Work in process - conversion; $67.850

Costs incurred in February - Direct materials $414.000.

Costs incurred in February - Conversion; $618.150

Calculate the cost per equivalent unit of conversion

Answer 1

FIFO method :
Equivalent units of conversion	= ( Beginning work in process units * (1-%completion ) ) + Units started and completed + ( Ending work in process * % completion )
	=(44000*(1-55%)) + 129000 + (39500*35%)	162625 units
Cost per equivalent unit of conversion	= Conversion cost incurred in February / Equivalent units of Conversion
	=$618150/162625	$3.80
Note : In the absence of any information regarding rounding off, the answer is rounded off to 2 decimal places