Exercise 8-33 & 8-34 (LO 8-5) The Matsui Lubricants plant uses the FIFO method t

Question

Exercise 8-33 & 8-34 (LO 8-5)

The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day:

Quantity information is obtained from the manufacturing records and includes the following:

(40% complete as to materials,
20% complete as to conversion)

Beginning WIP inventory Direct materials $ 976 Conversion costs 272 Current period costs Direct materials 11,440 Conversion costs 6,644 Exercise 8-33 Compute Costs per Equivalent Unit: FIFO Method (LO 8-5) Required: (1) Compute the equivalent units for the materials and conversion cost calculations Answer is complete but not entirely correct. Equivalent units for materials 4,720 Equivalent units for conversion costs 4,522 (2) Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. (Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Cost Per Equivalent Unit Direct materials S Conversion costs 2.42 1.47

Explanation / Answer

Equivalent unit under FIFO

Equivalent unit of material = (600*40%+2800*100%+1200*40%) = 3520 units

Equivalent unit of conversion = (600*47%+2800*100%+1200*20%) = 3322 units

Cost per equivalent unit :

Direct material = 11440/3520 = 3.25 per unit

Conversion cost = 6644/3322 = 2 per unit

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