Question

Eban Corporation uses the FIFO method in its process costing system. The first processing department, the Welding Department, started the month with 22,200 units in its beginning work in process inventory that were 50% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $66,200. An additional 69,000 units were started into production during the month. There were 18,800 units in the ending work in process inventory of the Welding Department that were 20% complete with respect to conversion costs. A total of $312,160 in conversion costs were incurred in the department during the month.

The cost per equivalent unit for conversion costs is closest to:

Answer 1

The cost per equivalent unit for conversion costs is closest to: $4.80

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
			Conversion cost		Conversion cost
Beginning WIP	22,200		50%		50%
Units introduced	69,000
Total units to be accounted for	91,200
Completed and Transferred unit	72,400		0%		100%
Ending WIP	18,800		0%		20%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units			Conversion cost
Units Transferred:				% completed this period	Equivalent Units
From WIP	22,200			50%	11,100
From units started/Introduced	50,200			100%	50,200
Total	72,400				61,300
	Total Units			Conversion cost
Ending WIP				% completed this period	Equivalent Units
Total	18,800			20%	3,760
Total EUP	91,200				65,060

.

	Conversion cost
Cost incurred in Current Period	$ 312,160
Total Equivalent Units	65,060
Cost per Equivalent Units	$ 4.80