Question

Nettle Co. uses process costing to account for the production of rubber balls. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 12,700 units for materials and 12,000 units for conversion costs. Beginning Inventory consisted of $8,000 in materials and $8,800 in conversion costs. April costs were $30,000 for materials and $51,000 for conversion costs. Ending Inventory still in process was 3,000 units (100% complete for materials, 50% for conversion). The equivalent cost per unit for conversion costs using the FIFO method would be:

Multiple Choice

$4.50

$8.15

$1.40

$4.25

 

 

Answer 1

Under FIFO, cost per equivalent units

= Current period cost / Equivalent units

= $ 51000 conversion cost incurred / 12000 equivalent units for conversion cost

= $ 4.25

The equivalent cost per unit for conversion costs using the FIFO method would be: 

Correct Answer = $ 4.25 will be Equivalent cost per unit for Conversion Cost.

$ 4.25 will be Equivalent cost per unit for Conversion Cost.