Question

Carmelita Inc., has the following information available:

	Costs from Beginning Inventory	Costs from current Period
Direct materials	$4,900	$29,300
Conversion costs	5,700	150,800

At the beginning of the period, there were 600 units in process that were 43% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 5,200 units were started and completed. Ending inventory contained 400 units that were 34% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method.

The cost of completing a unit during the current period was

a.$26.56

b.$31.79

c.$47.69

d.$38.15

Answer 1

FIFO method :
Calculation of equivalent units :
	Materials		Conversion cost
	Working	Units	Working	Units
Beginning inventory*(100%-%completed)	600*(100%-100%)	0	600*(100%-43%)	342
(+) Units started and completed*100%	5200*100%	5200	5200*100%	5200
(+) Ending inventory*%completed	400*100%	400	400*34%	136
Equivalent units		5600		5678
Calculation of cost per equivalent unit
	Materials	Conversion cost
Cost from current period	29300	150800
(/) Equivalent units	5600	5678
Cost per equivalent unit	5.23	26.56

Cost of completing a unit = Cost per equivalent unit of material + Cost per equivalent units of conversion cost = 5.23 + 26.56

31.79

Option b