94.Richards Corporation uses the FIFO method of process costing. The following i

Question

94.Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating Department: Units: Beginning Inventory: 82,000 units, 70% complete as to materials and 25% complete as to conversion. Units started and completed: 252,000. Units completed and transferred out: 334,000. Ending Inventory: 31,000 units, 40% complete as to materials and 15% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $39,200. Costs in beginning Work in Process - Conversion: $81,700. Costs incurred in October - Direct Materials: $718,480. Costs incurred in October - Conversion: $995,580. Calculate the cost per equivalent unit of conversion.

Explanation / Answer

Equivalent unit of conversion under FIFO = (82000*75%+252000*100%+31000*15%) = 318150 units

Cost per equivalent unit of conversion = 995580/318150 = 3.13 per equivalent unti

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