Use this information about Carmelita Inc. to answer the question that follow. Ca

Question

Use this information about Carmelita Inc. to answer the question that follow.

Carmelita Inc. has the following information available:

At the beginning of the period, there were 500 units in process that were 45% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 5,100 units were started and completed. Ending inventory contained 400 units that were 22% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method.

The cost of completing a unit (rounded to the nearest cent) during the current period was

Costs from Beginning Inventory Costs from Current Period Direct materials $5,100 $23,600 Conversion costs 6,500 158,100

Explanation / Answer

unit transfered out = beginning + started -ending

                    = 500 +5100 -400

                     = 5200

The cost of completing a unit (rounded to the nearest cent) during the current period = material cost +conversion cost

         = 4.62745+31.22655

         = $ 35.85 per unit

Material conversion Units transfered from beginning WIP 0 275      [500(1-.45 complete) ,so it means .55 is incomplete] units started and transfered out [5200-500 from beginning WIP ] 4700 4700 Ending WIP 400 88            [400*.22] Equivalent units 5100 5063 cost incurred during the period 23600 158100 cost per equivalent units 23600/5100 = $ 4.62745 158100/5063 = $ 31.22655

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