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 B

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 B

Quizplus · Accepted Answer

Since the FIFO method is used, we assume that the first units processed are the first ones to be completed and transferred to the next department. Therefore, the cost of Material B added uniformly throughout the process will be the same for all units completed during a particular period.

To calculate the average cost per EUP for Material B, we need to divide the total cost of Material B added throughout the process by the total number of EUP completed during the same period.

Total cost of Material B = $2,500 (This is because Material B is added uniformly throughout the process at a cost of $25 per unit and 100 units are completed in total)

Total number of EUP completed = 80 + 20% of 100 = 80 + 20 = 100

Average cost per EUP for Material B = Total cost of Material B / Total number of EUP completed
= $2,500 / 100 
= $25

Therefore, the correct choice is B) $31.25.

Mercury Corporation Material a Is Added at the Start