Sparky Corporation uses the FIFO method of process costing. The following inform

Question

Sparky Corporation uses the FIFO method of process costing. The following information is available for February in its Molding Department:

Units:
Beginning Inventory: 45,000 units, 100% complete as to materials and 60% complete as to conversion.
Units started and completed: 130,000.
Units completed and transferred out: 175,000.
Ending Inventory: 40,000 units, 100% complete as to materials and 25% complete as to conversion.

Costs:
Costs in beginning Work in Process - Direct Materials: $63,000.
Costs in beginning Work in Process - Conversion: $68,850.
Costs incurred in February - Direct Materials: $420,600.
Costs incurred in February - Conversion: $619,150.

Calculate the cost per equivalent unit of materials.

Multiple Choice

$1.53

$2.47

$1.96

$2.94

$3.24

Explanation / Answer

Equivalent unit of material = (45000*0%+130000*100%+40000*100%) = 170000 units

Cost per equivalent unit = 420600/170000 = 2.47

so answer is b) $2.47

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