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Sarfina Corporation uses the FIFO method in its process costing system. Operating data for the Casting...

Sarfina Corporation uses the FIFO method in its process costing system. Operating data for the Casting Department for the month of September appear below:

Units Percent Complete with Respect to Conversion
Beginning work-in-process inventory 15,000 20 %
Transferred in from the prior department during September 89,000
Ending work-in-process inventory 24,000 90 %


According to the company's records, the conversion cost in beginning work-in-process inventory was $15,660 at the beginning of September. Additional conversion costs of $526,524 were incurred in the department during the month.


What would be the cost per equivalent unit for conversion costs for September? (Round off to three decimal places.)

a. 5.916

b. 5.340

c. 5.220

d. 5.213

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Answer #1

Calculate equivalent unit of conversion :

Beginning work in process (15000*80%) 12000
Units started and completed (65000*100%) 65000
Ending work in process (24000*90%) 21600
Equivalent unit of conversion cost 98600

Calculate cost per equivalent unit :

Cost per equivalent unit = cost during period /equivalent unit of conversion

                                    = 526524/98600

Cost per equivalent unit = 5.34

so answer is b) 5.340

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