Question

Bentley Enterprises uses process costing to control costs in the manufacture of Dust Sensors for the mining industry. The following information pertains to operations for November.

	Units
Work in process, November 1st		17,400
Started in production during November		114,000
Work in process, November 30th		25,400

The beginning inventory was 60% complete as to materials and 20% complete as to conversion costs. The ending inventory was 80% complete as to materials and 40% complete as to conversion costs.
Costs pertaining to November are as follows:
Beginning inventory: direct materials, $55,960; direct labor, $21,720; manufacturing overhead, $16,640.
Costs incurred during the month: direct materials, $482,000; direct labor, $196,880; manufacturing overhead, $405,160.

What is the equivalent unit cost for the conversion costs assuming Bentley uses first-in, first-out (FIFO) process costing?

Multiple Choice

A) $5.52.

B) $5.34.

C) $5.00.

D) $5.32.

Answer 1

Correct answer-----------$ 5.34

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed	% completed this period
	Material	Conversion	Material	Conversion
Beginning WIP	17,400	60%	20%	40%	80%
Units introduced	114,000
Total units to be accounted for	131,400
Completed and Transferred unit	106,000	0%	0%	100%	100%
Ending WIP	25,400	0%	0%	80%	40%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material	Conversion
Units Transferred:	% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	17,400	40%	6,960	80%	13,920
From units started/Introduced	88,600	100%	88,600	100%	88,600
Total	106,000		95,560		102,520
	Total Units	Material	Conversion
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	25,400	80%	20,320	40%	10,160
Total EUP	131,400		115,880		112,680

..

STEP 3
Cost per Equivalent Units AND Cost to be accounted for
		Conversion
Cost incurred in Current Period		$ 602,040
Total Equivalent Units		112,680
Cost per Equivalent Units		$ 5.34