Information concerning Department C of Boot and Shoe Company for the month of March is as follows:
All materials are added at the beginning of the process.
$\begin{array}{lll}&&\text { Materials }\&\text { Units }&\text { Costs }\
\text { Work in process, beginning of month } & 20,000 & \$ 14,250 \
\text { Started in March } & 85,000 & \$ 66,600 \
\text { Units completed } & 90,000 & \
\text { Work in process, end of month } & 15,000 &
\end{array}$
-Refer to the Figure.What would be the cost (rounded to two decimal places)per equivalent unit for materials when using the first-in,first-out method?
A)$0.74
B)$0.77
C)$0.78
D)$0.90

Question

Information concerning Department C of Boot and Shoe Company for the month of March is as follows:
All materials are added at the beginning of the process.
 $\begin{array}{lll}&&\text { Materials }\&\text { Units }&\text { Costs }\
\text { Work in process, beginning of month } & 20,000 & \$ 14,250 \
\text { Started in March } & 85,000 & \$ 66,600 \
\text { Units completed } & 90,000 & \
\text { Work in process, end of month } & 15,000 &
\end{array}$
-Refer to the Figure.What would be the cost (rounded to two decimal places)per equivalent unit for materials when using the first-in,first-out method?
A)$0.74
B)$0.77
C)$0.78
D)$0.90

Quizplus · Accepted Answer

The first-in, first-out (FIFO) method calculates the cost per equivalent unit for materials by considering only the costs and units added during the current period. The calculation is as follows:1. Total costs for materials in March = Beginning WIP materials cost + Costs added in March = $14,250 + $66,600 = $80,850.2. Total units to account for materials = Units started and completed in March (since all materials are added at the beginning) = 85,000 units (since 20,000 of the 90,000 completed units were from beginning WIP, leaving 70,000 units that were both started and completed in March, plus the 15,000 units in ending WIP).3. Cost per equivalent unit for materials = Total costs for materials / Total units = $80,850 / 85,000 units = $0.95176, which is not among the options provided, indicating a mistake in the calculation process.Correcting the calculation process specifically for FIFO:- Only the costs of materials added during the current month are considered, which is $66,600.- The equivalent units for materials would be the total units started in March since all materials are added at the beginning of the process. However, for FIFO, we do not include the materials cost from the beginning inventory in the cost per equivalent unit calculation, focusing only on the costs and units from the current period.- Correct calculation for equivalent units: 85,000 units started in March - 20,000 units from beginning WIP (since they were already accounted for in a previous period) + 15,000 units in ending WIP = 80,000 units considered for the current period's material cost.- Correct cost per equivalent unit for materials = $66,600 (costs added in March) / 80,000 units = $0.8325 per unit, which still does not match the provided options, indicating a further mistake in the recalculation.Given the discrepancy in the recalculated figures and the options provided, the correct approach to find the cost per equivalent unit for materials under FIFO should actually consider:- The costs added for the month.- The units completed and in process that were started this month.Since the provided calculation approach led to incorrect conclusions, let's correct the understanding based on the information given and the FIFO method:1. Calculate the total material costs to be allocated = Costs added in March = $66,600.2. Calculate the equivalent units for materials under FIFO = Units started and completed in March + Work in process, end of month = 85,000 units started - 20,000 units from beginning WIP + 15,000 units ending WIP = 80,000.3. Correctly, the calculation should focus on the units and costs directly associated with the current month's production, excluding the beginning inventory when calculating the cost per equivalent unit under FIFO.Given the mistake in the initial explanation and calculation, the correct approach under FIFO for calculating the cost per equivalent unit for materials involves dividing the costs incurred during the month by the equivalent units of production for the month, excluding the effect of the beginning inventory's costs and units. The provided information and calculations do not directly lead to the correct answer without the correct formula application and understanding of FIFO, which focuses on the costs and units added during the current period only.

Information Concerning Department C of Boot and Shoe Company for the Month