Bentley Enterprises uses process costing to control costs in the manufacture of
ID: 2600223 • Letter: B
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. (CMA Exam adapted)
The beginning inventory was 70% complete as to materials and 10% complete as to conversion costs. The ending inventory was 90% complete as to materials and 30% complete as to conversion costs.
Costs pertaining to November are as follows:
Beginning inventory: direct materials, $56,460; direct labor, $22,220; manufacturing overhead, $17,140.
Costs incurred during the month: direct materials, $487,000; direct labor, $201,880; manufacturing overhead, $410,160.
What is the equivalent unit cost for the conversion costs assuming Bentley uses first-in, first-out (FIFO) process costing?
$4.67.
$5.23.
$5.11.
$5.21.
Units Work in process, November 1st 17,900 Started in production during November 119,000 Work in process, November 30th 25,900Explanation / Answer
Calculation of equivalent units for the conversion costs
Total Conversion Costs incurred during november = Direct Labor+Manufacturing overhead
= $201,880+$410,160 = $612,040
Equivalent unit cost = $612,040/116,980 = $5.23
Therefore the correct option is $5.23
Beginning Inventory (17,900*90%) 16,110 Started and complete during november (119,000-25,900) 93,100 Ending Inventory (25,900*30%) 7,770 Total Equivalent units 116,980Related Questions
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