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 conversion costs for the first department for the month is closest to:
A) $37.87
B) $39.76
C) $43.81
D) $41.20

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 conversion costs for the first department for the month is closest to:
A) $37.87 
B) $39.76 
C) $43.81 
D) $41.20

Quizplus · Accepted Answer

To compute the cost per equivalent unit for conversion costs, we only need to consider the costs incurred during the period in the department. The total cost incurred for conversion costs during the period is $167,040, and the equivalent units for conversion costs are 4,400. Therefore, the cost per equivalent unit for conversion costs is $167,040/4,400 = $37.91. The closest answer to this computed value is option A ($37.87), making it the best choice.

Moulgadi Corporation Uses the FIFO Method in Its Process Costing