Question

Mannarelli Corporation uses the FIFO method in its process costing system. Operating data for the Casting Department for the month of September appear below: 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. The cost per equivalent unit for conversion costs for September is closest to: (Round off to three decimal places.)

Answer 1

Answer:

$ 5.34

Explanation:

Calculation for cost per equivalent unit for conversion costs for September

First step is to find the Equivalent units of production

To complete beginning work-in-process:

Conversion 12,000

[15,000 units × (100%-20% )]

Units started and completed 65,000

(89,000-24,000)

Ending work-in-process

Conversion 21,600

(24,000 units × 90%)

Equivalent units of production 98,600

Second step is to calculate the Cost per equivalent unit using this formula

Cost per equivalent unit =Cost added during the period ÷Equivalent units of production

Let plug in the formula

Cost per equivalent unit = $526,524÷98,600

Cost per equivalent unit = $5.34

Therefore The cost per equivalent unit for conversion costs for September is closest to $ 5.34