Answer:
c) $3.00
Explanation:
The FIFO method assumes that the cost of the Beginning Work In Process will automatically go towards the completed units, because the units that were incomplete for the previous period are the first to be completed in the current period. Thus, we are only interested in the current costs instead of getting a weighted average (combining the cost of last year in beginning inventory and the cost of the current period).
Step 1
<em>Calculate the equivalent units</em>
To finish Beginning work in Process (36,000 x 50%) = 18,000
Started and Completed (102,000 - 36,000) x 100% = 66,000
Ending Work In Process (24,000 x 50%) = 12,000
Equivalent units of production for conversion Costs = 96,000
Step 2
<em>Determine the Conversion Costs for the Current period </em>
Conversion Costs incurred = $288,000
Step 3
<em>Determine the Cost per equivalent unit for conversion costs</em>
Cost per equivalent unit = Total Cost ÷ Total Equivalent units
therefore,
Cost per equivalent unit = $288,000 ÷ 96,000 = $3.00
