The following information is available for Department ABC for the month of September:
Materials are added at the beginning of the process. (Round unit costs to two decimal places.)

-Refer to the Figure.What would be Department ABC's cost per equivalent unit of production for conversion costs when using the FIFO method?
A)$0.73
B)$0.85
C)$1.02
D)$1.18

Question

The following information is available for Department ABC for the month of September:
Materials are added at the beginning of the process. (Round unit costs to two decimal places.)
 
-Refer to the Figure.What would be Department ABC's cost per equivalent unit of production for conversion costs when using the FIFO method?
A)$0.73 
B)$0.85 
C)$1.02 
D)$1.18

Quizplus · Accepted Answer

The cost per equivalent unit of production for conversion costs using the FIFO method is computed as follows:

Conversion costs: 
Costs added during the month = $91,080 
Equivalent units of production = 9,000 (5,000 + 4,000) 
Cost per equivalent unit of production = $91,080 ÷ 9,000 = $10.12

Cost per equivalent unit of production for materials is already given in the table as $2.27.

Thus, total cost per equivalent unit of production using the FIFO method = $2.27 + $10.12 = $12.39

Since we only need the cost per equivalent unit of production for conversion costs, we select choice B, which gives the correct answer of $0.85 when we subtract the cost of materials ($2.27) from the total cost ($12.39) and round to two decimal places.

The Following Information Is Available for Department ABC for the Month