Question

The debits to Work in Process--Assembly Department for April, together with data concerning production, are as follows: Work in process, April 1, 3,000 units: Direct materials cost, for 3,000 units $ 7,200 Conversion costs, for 3,000 units, 60% completed $ 6,000 Direct materials added during April, 10,000 units $ 25,000 Conversion costs during April $ 35,750 Goods finished during April, 12,000 units --- April 30 work in process, 1,000 units, 40% completed --- All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The direct materials cost per equivalent unit for April is: a) $2.50 per unit b) $5.25 per unit c) $2.08 per unit d) $2.40 per unit

Answer 1

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	FIFO
	Correct answer is a). $ 2.50 per unit
A1.	Quantities			Equivalent Units
			Whole Units	Materials	Conversion Cost		Complete
	Units to be account for
	Work in Process, Beginning	100%, 60%	3000	0	1200		100%	60%
	Unit Started and Completed in the period	Transferred Out-Beg WIP	9000	9000	9000		100%	100%
	Work in Process, Ending	100%, 80%	1000	1000	400		100%	40%
	Equivalent Units-FIFO		13000	10000	10600
A2.	Cost
				Materials	Convsersion Cost	Total
	Cost added during period			$             25,000	$                   35,750	$             60,750
	Total Cost to account for			$             25,000	$                   35,750	$             60,750
	Equivalent Units			10000	10600
	Unit Cost	Total Cost/Equivalent Units		$                  2.50	$                        3.37	$                  5.87