Question

1. A department uses the FIFO method of process costing. All direct materials are added at the beginning of the process. This department has the following data for this month.

   • 181 units in beginning WIP (54% complete with respect to conversion costs).
   • 8,874 units started
   • 103 units in ending WIP (27% complete with respect to conversion costs).
   • $1,898 beginning WIP direct materials costs
   • $1,923 beginning WIP conversion costs
   • $99,412 current month direct materials costs
   • $98,211 current month conversion costs

   What is the department's conversion cost per equivalent unit for this month (round final answer to nearest cent if necessary)?

Answer 1

Cost per equivalent unit for conversion = $ 11.06

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	181	100%	54%	0%	46%
Units introduced	8,874
Total units to be accounted for	9,055
Completed and Transferred unit	8,952	0%	0%	100%	100%
Ending WIP	103	0%	0%	100%	27%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	181	0%	-	46%	83
From units started/Introduced	8,771	100%	8,771	100%	8,771
Total	8,952		8,771		8,854
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	103	100%	103	27%	28
Total EUP	9,055		8,874		8,882

.

STEP 3
Cost per Equivalent Units AND Cost to be accounted for
	Material		Conversion cost		TOTAL
Cost incurred in Current Period	$ 99,412		$ 98,211		$ 197,623
Total Equivalent Units	8,874		8,882
Cost per Equivalent Units	$ 11.20		$ 11.06		$ 22.26