Castle Company uses the FIFO method in its process costing system. In the Cuttin

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:

Units. .. Conversion cost
Beginning work in process inventory 25,000 30,000
Units started into production, and cost incurred during the month 140,000 175,000
Units completed and transferred out 135,000

The cost per equivalent unit for conversion cost is closest to:

Explanation / Answer

cost per equivalent unit for conversion cost= 1.2407 or 1.241 cost per unit during the month175000/140000= 1.25 cost per equivalent unit for conversion cost= [30000+(1.25x110000)]/135000= 1.241

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