Question

Mullins Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Mullins Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:
Units in beginning work in process inventory		1,100
Materials costs	$	12,300
Conversion costs	$	22,600
Percent complete with respect to materials		75	%
Percent complete with respect to conversion		65	%
Units started into production during the month		9,400
Units transferred to the next department during the month		8,600
Materials costs added during the month	$	167,300
Conversion costs added during the month	$	356,500
Ending work in process inventory:
Units in ending work in process inventory		1,900
Percent complete with respect to materials		65	%
Percent complete with respect to conversion		50	%

The cost of a completed unit transferred out of the department is closest to: (Round equivalent units to the nearest whole number and round all other intermediate calculations to 2 decimal places.)

Multiple Choice

• A. $58.92

• B. $72.52

• C. $62.35

• D. 54.48

Answer 1

Correct answer------------A. $58.92

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	1,100	75%	65%	25%	35%
Units introduced	9,400
Total units to be accounted for	10,500
Completed and Transferred unit	8,600	0%	0%	100%	100%
Ending WIP	1,900	0%	0%	65%	50%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	1,100	25%	275	35%	385
From units started/Introduced	7,500	100%	7,500	100%	7,500
Total	8,600		7,775		7,885
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	1,900	65%	1,235	50%	950
Total EUP	10,500		9,010		8,835

.

STEP 3
Cost per Equivalent Units
	Material		Conversion cost		TOTAL
Cost incurred in Current Period	$ 167,300		$ 356,500		$ 523,800
Total Equivalent Units	9,010		8,835
Cost per Equivalent Units	$ 18.57		$ 40.35		$ 58.92