Question

The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day:

Beginning WIP inventory
Direct materials	$ 975
Conversion costs	362
Current period costs
Direct materials	14,400
Conversion costs	9,776

Quantity information is obtained from the manufacturing records and includes the following:

Beginning inventory	750 units	(60% complete as to materials, 52% complete as to conversion)
Current period units started	4,600 units
Ending inventory	1,500 units	40% complete as to materials, 20% complete as to conversion)

Required:

a. Compute the equivalent units for the materials and conversion cost calculations.

b. Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. (Round your answers to 2 decimal places.)

Answer 1

• All working forms part of the answer
• [a]

EUP - FIFO Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units of ENDING WIP	1,500	40.0%	600	20.0%	300
Units STARTED & COMPLETED	3,100	100%	3,100	100%	3,100
Units of beginning WIP	750	40.00%	300	48%	360
Equivalent Units of Production [ANSWERS]			4,000		3,760

• [b]

COST per EUP			Material		Conversion
Cost incurred this period			$          14,400.00		$                      9,776.00
Total Costs		Costs	$          14,400.00	Costs	$                      9,776.00
Equivalent units of production		EUP	4,000	EUP	3,760
Cost per EUP [ANSWERS]			$             3.60000		$                          2.6000