A company uses the FIFO method for inventory costing. During a period, a product

Question

A company uses the FIFO method for inventory costing. During a period, a production department had 58,000 units in beginning goods in process inventory which were 31% complete; the department completed and transferred 166,000 units. At the end of the period, 13,000 units were in the ending goods in process inventory and are 66% complete. All of these are with respect to labor. The production department had labor costs in the beginning goods is process inventory of $88,000 and total labor costs added during the period are $726,575. Compute the equivalent cost per unit for labor. $4.73. $5.21. $4.64. $4.67. $4.85.

Explanation / Answer

$4.64

Particulars Labour %completion Equivalent mat Opening WIP              58,000.00 69%                 40,020.00 Units started and completed(166000-58000)            108,000.00 100%               108,000.00 Closing WIP              13,000.00 66%                    8,580.00 Equivalent Units               156,600.00 Current Month Costs               726,575.00 Cost per Equivalent units                            4.64

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