Answer:
the cost per equivalent unit of production is $4.60
Explanation:
The concept of Equivalent unit of Production measures the output of a process in terms of percentage completion of inputs added into the units of outputs.
With FIFO method, we are only interested in the costs incurred in the year of production because, the costs of Opening Work in Process will in their entirety go towards the completed units
The first step is to determine the <em>Number of Equivalent units</em> as follows :
To finish Opening Work In Process (10,000 × 30%) = 3,000
Started and Completed ( 50,000 - 10,000) × 100% = 40,000
Closing Work In process ( 5,000 × 10%) = 500
Total Equivalent Units = 43,500
The Next Step is to Calculate <em>Cost per Equivalent Unit</em>.
Cost per Equivalent Unit = Total Costs / Total Equivalent Units
= $200,000 / 43,500
= $4.60
Therefore, the cost per equivalent unit of production is $4.60
