Question

Carmelita Inc., has the following information available: COST FROM BEGINNING INVENTORY direct materials $2,500 Conversion cost $6,200 COST FROM CURRENT PERIOD direct materials $22,252 conversion costs $150,536 At the beginning of the period, there were 500 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs. During the period 4,500 units were started and completed. Ending inventory contained 340 units that were 30 percent complete as to conversion costs and 100 percent complete as to materials costs. (Assume that the company uses the FIFO process cost method.) The cost of completing a unit during the current period was:__________

Answer 1

Answer:

The cost of completing a unit during the current period was?

$35.95 per unit

Explanation:

COST FROM BEGINNING INVENTORY 500 units:

direct materials $2,500, 100% complete

Conversion cost $6,200, 60% complete

COST FROM CURRENT PERIOD 4,500 units started and completed, 340 units left in ending inventory:

• 30% complete to conversion cost
• 100% complete to direct materials

current period costs:

• direct materials $22,252
• conversion costs $150,536

equivalent units of production:

• direct materials = 4,500 + 340 = 4,840
• conversion costs = 4,500 + (500 x 40%) + (340 x 30%) = 4,802

cost per equivalent unit:

• $22,252 / 4,840 = $4.60 per unit
• $150,536 / 4,802 = $31.35 per unit
• total = $4.60 + $31.35 = $35.95 per unit