Question

Sparky Corporation uses the FIFO method of process costing. The following information is available for February in its Molding Department:Units:Beginning Inventory: 25,000 units, 100% complete as to materials and 55% complete as to conversion.Units started and completed: 110,000.Units completed and transferred out: 135,000.Ending Inventory: 30,000 units, 100% complete as to materials and 30% complete as to conversion.Costs:Costs in beginning Work in Process - Direct Materials: $43,000.Costs in beginning Work in Process - Conversion: $48,850.Costs incurred in February - Direct Materials: $287,000.Costs incurred in February - Conversion: $599,150.Calculate the cost per equivalent unit of materials.

Answer 1

Answer:

Cost per EUP Materials: $2,05

Explanation:

                                                 Units                Materials              Conversion

Beginning WIP:                      25,000          25,000 (100%)         13,750 (55%)

Units Transferred Out:          135,000          135,000                    135,000

Ending WIP:                            30,000          30,000 (100%)          9,000 (30%)

Equivalent Units of Production (FIFO): Units Transferred Out + Equivalent Units in ending WIP - Equivalent Units in Beginning WIP

EUP Materials: 135,000 + 30,000 - 25,000 = 140,000

Cost per Equivalent Unit (FIFO): Total Cost Incurred in the Period / Equivalent Units of Production

Cost per EUP Materials: 287,000 / 140,000 = $2,05