Sarfina Corporation uses the FIFO method in its process costing system. Operating data for the Casting Department for the month of September appear below:
$\begin{array}{ll}
&&\text { Percent Complete with Respect }\

& \text { Units } &\text { to Conversion}\
\text { Beginning work-in-process } & 15,000 &20\%\
\text { inventory } & \
\text { Transferred in from the prior } &\
\text { department } & 89,000 \
\text { during September } & \
\text { Ending work-in-process inventory } & 24,000&90\%
\end{array}$

According to the company's records, the conversion cost in beginning work-in-process inventory was $15,660 at the beginning of September. Additional conversion costs of $526,524 were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for September? (Round your answer to 3 decimal places.)
A) $5.916.
B) $5.340.
C) $5.220.
D) $5.213.

Question

Sarfina Corporation uses the FIFO method in its process costing system. Operating data for the Casting Department for the month of September appear below:
$\begin{array}{ll} 
&&\text { Percent Complete with Respect }\
 
& \text { Units } &\text { to Conversion}\
\text { Beginning work-in-process } & 15,000 &20\%\
\text { inventory } & \
\text { Transferred in from the prior } &\
\text { department } & 89,000 \
\text { during September } & \
\text { Ending work-in-process inventory } & 24,000&90\%
\end{array}$

According to the company's records, the conversion cost in beginning work-in-process inventory was $15,660 at the beginning of September. Additional conversion costs of $526,524 were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for September? (Round your answer to 3 decimal places.)
A) $5.916.
B) $5.340.
C) $5.220.
D) $5.213.

Quizplus · Accepted Answer

The cost per equivalent unit for conversion costs is calculated by dividing the total conversion costs by the equivalent units of production. The equivalent units for conversion are calculated as follows: Equivalent units = Units transferred out + (Ending WIP units * % complete) - (Beginning WIP units * % complete)  = 89,000 + (24,000 * 90%) - (15,000 * 20%)  = 89,000 + 21,600 - 3,000  = 107,600  Total conversion costs = Beginning WIP conversion cost + Additional conversion costs  = $15,660 + $526,524  = $542,184  Cost per equivalent unit = Total conversion costs / Equivalent units  = $542,184 / 107,600  = $5.340

Sarfina Corporation Uses the FIFO Method in Its Process Costing