Moulgadi Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.
-The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $23.28
B) $21.83
C) $23.96
D) $19.70

Question

Moulgadi Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:  Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.
-The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $23.28 
B) $21.83 
C) $23.96 
D) $19.70

Quizplus · Accepted Answer

To calculate the cost per equivalent unit for materials, we add the beginning inventory cost to the cost incurred during the month, and divide the total by the equivalent units produced.

Beginning inventory:
Materials cost = $5,600
Equivalent units = 400

Cost incurred during the month:
Materials cost = $57,200
Equivalent units = 2,600

Total cost:
Materials cost = $62,800
Equivalent units = 3,000

Cost per equivalent unit for materials = $62,800 ÷ 3,000 = $20.933

Rounding to three decimal places, the cost per equivalent unit for materials is $20.933, or closest to answer B, $21.83.

Moulgadi Corporation Uses the FIFO Method in Its Process Costing