Mukluk Company uses the FIFO method in its process costing system. The conversion cost for the month of April is $5.00 per equivalent unit and the material cost is $2.90 per equivalent unit. At the beginning of the month, 1,000 units were in process that were 100% complete with respect to materials and 30% complete with respect to conversion, with a total cost at that point of $2,400. If these units are fully complete by the end of the month, their total cost will be:
A) $3,500
B) $3,900
C) $5,900
D) $8,000

Question

Quizplus · Accepted Answer

The total cost of the units at the beginning of the month is $2,400. The conversion cost for the month is $5.00 per equivalent unit, and the material cost is $2.90 per equivalent unit. The units are 100% complete with respect to materials and 30% complete with respect to conversion at the beginning of the month. This means that the equivalent units of production for conversion are 1,000 units x 30% = 300 units. The equivalent units of production for materials are 1,000 units x 100% = 1,000 units. The total cost of the units at the end of the month is $2,400 + (300 units x $5.00) + (1,000 units x $2.90) = $5,900.

Mukluk Company Uses the FIFO Method in Its Process Costing