Richards Corporation uses the FIFO method of process costing. The following info
ID: 2433016 • Letter: R
Question
Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating Department:
Units:
Beginning Inventory: 100,000 units, 80% complete as to materials and 25% complete as to conversion.
Units started and completed: 270,000.
Units completed and transferred out: 370,000.
Ending Inventory: 40,000 units, 40% complete as to materials and 10% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $57,200.
Costs in beginning Work in Process - Conversion: $99,700.
Costs incurred in October - Direct Materials: $828,520.
Costs incurred in October - Conversion: $1,103,900.
Calculate the cost per equivalent unit of conversion.
Multiple Choice
$2.65
$3.45
$3.16
$4.09
$2.91
Explanation / Answer
$3.16
Working:
a. Calculation of equivalent units of production: Materials Conversion Physical Units % Materials Equivalent units of Production-Material % Materials Equivalent units of Production-Material Beginning Inventory 1,00,000 20% 20,000 75% 75,000 Units started and completed during this period 2,70,000 100% 2,70,000 100% 2,70,000 Ending Inventory 40,000 40% 16,000 10% 4,000 Total 3,06,000 3,49,000 b. Calculation of cost per equivalent unit Materials Conversion Cost incurred during the period $ 8,28,520 $ 11,03,900 /Equivalent units of production 3,06,000 3,49,000 Cost per Equivalent unit $ 2.71 $ 3.16Related Questions
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