Sheldon Toys Inc manufactures toy cannons. This period, beginning WIP inventory was 4000 units that were 30 per cent complete, and ending inventory was 2000 units that were 40 per cent complete. Beginning and ending WIP costs were $10 000 and $7000 respectively. Further, 9000 units were produced this year at a cost of $25 000.
-What is the cost per equivalent unit,if the FIFO method was used?
A) $3.27
B) $2.24
C) $3.81
D) $4.29

Question

Quizplus · Accepted Answer

Using the FIFO method, the cost per equivalent unit is calculated as (Beginning inventory cost + Cost of units added during the period)/(Total equivalent units).
= (6000 + 96000)/(25000) = $2.40
Thus, the cost per equivalent unit using FIFO method is $2.40, which is closest to option B, $2.24. Therefore, B is the best choice.

Sheldon Toys Inc Manufactures Toy Cannons