The debits to Work in Process-Assembly Department for April, together with data concerning production, are as follows: April 1, work in process: All direct materials are added at the beginning of the process, and the first-in, first-out method is used to cost inventories. The conversion cost per equivalent unit for April is
A) $2.48
B) $2.75
C) $2.50
D) $5.25

Question

The debits to Work in Process-Assembly Department for April, together with data concerning production, are as follows: April 1, work in process:  All direct materials are added at the beginning of the process, and the first-in, first-out method is used to cost inventories. The conversion cost per equivalent unit for April is
A) $2.48 
B) $2.75 
C) $2.50 
D) $5.25

Quizplus · Accepted Answer

Using the first-in, first-out method, we need to compute the equivalent units of production for materials and conversion costs separately.

For materials:

Units started and completed in April: 17,500 
Units in process at the end of April: 2,500 x 50% = 1,250

Equivalent units of production for materials = 17,500 + 1,250 = 18,750

For conversion costs:

Units started and completed in April: 17,500 
Units in process at the end of April: 2,500 x 30% = 750

Equivalent units of production for conversion costs = 17,500 + 750 = 18,250

Total costs incurred for April:

Direct materials: $39,375 
Conversion costs: $62,500

Cost per equivalent unit of materials = $39,375 / 18,750 = $2.10 
Cost per equivalent unit of conversion costs = $62,500 / 18,250 = $3.43

Conversion cost per equivalent unit for April = $3.43

Therefore, the best choice is B.

The Debits to Work in Process-Assembly Department for April, Together