Kimbeth Manufacturing makes Dust Density Sensors (DDS), a safety device for the

Question

Kimbeth Manufacturing makes Dust Density Sensors (DDS), a safety device for the mining industry. The company uses a process costing system and has only a single processing department. The following information pertains to operations for the month of May:

Units
Beginning work in process inventory......... 16,500
Started into production during May........... 105,000
Completed during May............................ 97,000
Ending work in process inventory............. 24,500

The beginning work in process inventory was 70% complete with respect to materials and 25% complete with respect to conversion costs. The ending work in process inventory was 85% complete with respect to materials and 30% complete with respect to conversion costs. The costs were as follows:

Materials Conversion
Beginning work in process inventory.... $54,610 $35,610
Costs incurred during May.................. $468,500 $574,540

Using the FIFO method, the cost per equivalent unit of materials for May is closest to:

Explanation / Answer

units: beginning: 16,500 started into production: 105,000 completed: 97,000 ending wip: 24,500 Completed and transferred: 113,500 - 24,500 = 89,000 Equivalent units for May for materials: 97,000*100% + 24,500*85% - 16500*70% = 106,275 106,275 equivalent units for materials costs for materials incurred 468,500 $468,500/106,275 = $4.41

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