Imbram Corporation uses the FIFO method in its process costing system. The first

Question

Imbram Corporation uses the FIFO method in its process costing system. The first processing department, the Forming Department, started the month with 23,000 units in its beginning work in process inventory that were 40% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $27,692. An additional 86,000 units were started into production during the month and 86,000 units were completed and transferred to the next processing department. There were 23,000 units in the ending work in process inventory of the Forming Department that were 10% complete with respect to conversion costs. A total of $221,480 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:

Explanation / Answer

CALCULATION OF TOTAL EQUIVELENT UNITS AND COST FOR CONVERSION COST

BEGINNG WORK IN PROCECSS (23000 * 60%) 13800 UNIT STARTED AND COMPLITED (86000 * 100%) 86000 ENDING WORKING IN PROCESS (23000 * 10%) 2300 EQUIVELENT UNITS 102100 TOTAL CONVERSION COST FOR THE MONTH $221480 COST PER EQUIVELENT UNIT ($221480 / 102100) $2.17

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