Question

The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day:

    

Beginning WIP inventory
Direct materials	$	1,926
Conversion costs		514
Current period costs
Direct materials		22,490
Conversion costs		13,414

  

Quantity information is obtained from the manufacturing records and includes the following:

  

Beginning inventory	610	units	(70% complete as to materials, 50% complete as to conversion)
Current period units started	4,100	units
Ending inventory	1,400	units	(40% complete as to materials, 10% complete as to conversion)

  

Required:

Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. (Round your answers to 2 decimal places.)

   

Answer 1

Equivalent unit :

	Whole unit	%	EUP-material	%	EUP-conversion
Beginning work in process	610	30%	183	50%	305
Unit started and completed	2700	100%	2700	100%	2700
Ending work in process	1400	40%	560	10%	140
Equivalent unit of production	4710		3443		3145

Cost per equivalent unit of material = 22490/3443 = $6.53

Cost per equivalent unit of conversion = 13414/3145 = $4.27