Harry Chemicals Ltd is using the First-In, First-Out (FIFO) method for inventory costing and reported the following details for the month of September:
Cost details related to the above inventories are as follows: Total cost in beginning WIP inventory is $2,200 (DM, $1,230; and Conversion, $970). Costs added to WIP inventory in the given period are $4,545 (DM, $1,515; and Conversion, $3,030). Based on the given information, calculate the cost per equivalent unit for DM and Conversion?
A) Cost per equivalent unit for DM is $0.61, and for Conversion is $1.21.
B) Cost per equivalent unit for DM is $0.71, and for Conversion is $1.31.
C) Cost per equivalent unit for DM is $0.85, and for Conversion is $1.91.
D) Cost per equivalent unit for DM is $1.10, and for Conversion is $1.60.

Question

Harry Chemicals Ltd is using the First-In, First-Out (FIFO) method for inventory costing and reported the following details for the month of September:
 Cost details related to the above inventories are as follows: Total cost in beginning WIP inventory is $2,200 (DM, $1,230; and Conversion, $970). Costs added to WIP inventory in the given period are $4,545 (DM, $1,515; and Conversion, $3,030). Based on the given information, calculate the cost per equivalent unit for DM and Conversion?
A) Cost per equivalent unit for DM is $0.61, and for Conversion is $1.21. 
B) Cost per equivalent unit for DM is $0.71, and for Conversion is $1.31. 
C) Cost per equivalent unit for DM is $0.85, and for Conversion is $1.91. 
D) Cost per equivalent unit for DM is $1.10, and for Conversion is $1.60.

Quizplus · Accepted Answer

Using the FIFO method, the cost per equivalent unit can be calculated as: costs added to WIP Inventory this period/total equivalent units of work done this period. For DM, this cost is equal to ($1,515/2,500 units) $0.61 per unit. For Conversion, this cost is equal to ($3,030/2,500 units) $1.21 per unit.

Harry Chemicals Ltd Is Using the First-In, First-Out (FIFO) Method