Mercury Corporation Material A is added at the start of production,while Material B is added uniformly throughout the process.
Refer to Mercury Corporation Assuming a FIFO method of process costing,compute the average cost per EUP for Material A

Question

Mercury Corporation  Material A is added at the start of production,while Material B is added uniformly throughout the process.
Refer to Mercury Corporation Assuming a FIFO method of process costing,compute the average cost per EUP for Material A

Quizplus · Accepted Answer

Under the FIFO method, the cost of Material A is based on the cost of the units completed and transferred out of the process. Therefore, the average cost per EUP for Material A would be calculated based on the cost of the beginning inventory plus the cost of units started and completed during the current period, divided by the equivalent units of production.

From the information given, the total cost of Material A added at the start of production is $12,500 (500 units x $25 per unit). The total equivalent units of production for Material A is 625 (500 units in beginning inventory + 125 units started and completed during the current period).

Therefore, the average cost per EUP for Material A would be:

($12,500 cost of Material A + beginning inventory) / 625 equivalent units of production = $20.00 per EUP for Material A.

Thus, the correct choice is C) $20.00.

Mercury Corporation Material a Is Added at the Start