Castle Company uses the FIFO method in its process costing system.In the Cutting Department in June,units were four-fifths complete with respect to conversion in the beginning work in process inventory and one-third complete with respect to conversion in the ending work in process inventory.Other data for the department for June follow: The cost per equivalent unit for conversion cost is closest to:
A)$1.40
B)$1.35
C)$1.21
D)$1.64

Question

Castle Company uses the FIFO method in its process costing system.In the Cutting Department in June,units were four-fifths complete with respect to conversion in the beginning work in process inventory and one-third complete with respect to conversion in the ending work in process inventory.Other data for the department for June follow:   The cost per equivalent unit for conversion cost is closest to:
A)$1.40 
B)$1.35 
C)$1.21 
D)$1.64

Quizplus · Accepted Answer

FIFO method
Units started and completed during the period = Units completed during the period - Units in beginning work in process inventory = 135,000 - 25,000 = 110,000
 11eaa48f_7bce_563b_9e4a_a5609b991911_TB2485_00 
Units in beginning work in process inventory + Units started into production during the period = Units in ending work in process inventory + Units completed during the period
25,000 + 140,000 = X + 135,000
X = 25,000 + 140,000 - 135,000 = 30,000
Y = X F1F1F1S1F1F1F10 1/3 = 30,000 F1F1F1S1F1F1F10 1/3 = 10,000
Z = 5,000 + 110,000 + Y = 5,000 + 110,000 + 10,000 = 125,000
 11eaa48f_7bce_563c_9e4a_817f305479fe_TB2485_00

Castle Company Uses the FIFO Method in Its Process Costing