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2 years ago

Pablo Company calculates the cost for an equivalent unit of production using costing.

Business

1 answer:

mezya [45]2 years ago

7 0

Answer:

$5.275 & $5.40

Explanation:

According to the scenario, computation of the given data are as follows:

Weighted Average Method :

Units Physical Direct Conversion

Completed & transferred 70,000 70,000 70,000

Ending WIP 30,000 30,000 24,000

( 30,000 × 80%)

Equivalent production Unit 100,000 100,000 94,000

So, Cost per equivalent unit under weighted average method can be calculated as:

Direct material Conversion Total cost

$1.825 $3.45 $5.275

(60,000 + 122,500) (25000+299300)

= (182,500 ÷ 100.000) =(324300 ÷ 94,000)

FIFO Method

Units Physical Direct Conversion

Beginning WIP 30,000 0 18,000

(30,000 × 0%) (30,000 × 60%)

Started & completed 40,000 40,000 40,000

Ending WIP 30,000 30,000 24,000

(30,000 × 80%)

Equivalent production Unit 100,000 70,000 82,000

So, Cost per equivalent unit under FIFO method can be calculated as:

Direct material Conversion Total cost

$1.75 $3.65 $5.40

(122,500 ÷ 70,000) (299,300 ÷ 82,000)

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