(Appendix 6A)Ebis Company uses the FIFO method in its process costing system.The first processing department,the Welding Department,started the month with 13,000 units in its beginning work-in-process inventory;10% of the units were complete with respect to conversion costs.The conversion cost in this beginning work-in-process inventory was $12,610.An additional 89,000 units were started into production during the month.There were 22,000 units in the ending work-in-process inventory of the Welding Department;30% of these units were complete with respect to conversion costs.A total of $806,085 in conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month on the department's production report? (Round off to three decimal places. )
A) $8.026.
B) $9.700.
C) $9.057.
D) $9.450.Beginning inventory.$806,085/(13,000 * .9 + 67,000 * 1 + 22,000 * .3)= $9.45

Question

Quizplus · Accepted Answer

The cost per equivalent unit for conversion costs is calculated by dividing the total conversion cost for the period by the equivalent units of production. The equivalent units of production are calculated by adding the equivalent units in the beginning work-in-process inventory to the units started into production during the period and subtracting the equivalent units in the ending work-in-process inventory. Using the FIFO method, the cost of beginning work-in-process inventory is based on the cost incurred in a prior period. Therefore, the cost per equivalent unit for conversion costs for the month is $9.45 ($806,085/(13,000 * .9 + 67,000 * 1 + 22,000 * .3)). Therefore, the best choice is D.

(Appendix 6A)Ebis Company Uses the FIFO Method in Its Process