Lee Company began making lipstick in October using a single-step process.Lee incurred $42,000 for materials and $48,640 for conversion during the month.There were 21,000 cases of lipstick started in October and 3,000 cases unfinished (40 percent complete)at the end of the period.All materials were added at the beginning of the production process. What is the unit cost for materials for Lee using the FIFO method?
A)$2.00
B)$2.03
C)$4.03
D)$4.53

Question

Quizplus · Accepted Answer

The unit cost for materials is calculated by dividing the total cost of materials by the total number of units produced. Since all materials are added at the beginning, the entire cost of materials is allocated to the units. Therefore, the unit cost for materials is $42,000 / 21,000 cases = $2.00 per case.

Lee Company Began Making Lipstick in October Using a Single-Step