Ethan Enterprises uses process costing to control costs in the manufacture of Du

Question

Ethan Enterprises uses process costing to control costs in the manufacture of Dust Sensors for the mining industry. The following information pertains to operations for November. (CMA Exam adapted)

The beginning inventory was 70% complete as to materials and 10% complete as to conversion costs. The ending inventory was 80% complete as to materials and 30% complete as to conversion costs.
Costs pertaining to November are as follows:
Beginning inventory: direct materials, $55,360; direct labor, $21,120; manufacturing overhead, $16,040.
Costs incurred during the month: direct materials, $476,000; direct labor, $190,880; manufacturing overhead, $399,160.

What is the equivalent unit cost for the conversion costs assuming Ethan uses first-in, first-out (FIFO) process costing?

$5.29.

$5.58.

$5.61.

$5.71.

Units Work in process, November 1st 16,800 Started in production during November 108,000 Work in process, November 30th 24,800

Explanation / Answer

Calculate equivalent unit for conversion cost :

equivalent unit cost = (190880+399160)/105760 = 5.58

so answer is b) $5.58

Whole unit % equivalent unit for conversion cost Beginning work in process 16800 90% 15120 Unit started and completed 83200 100% 83200 Ending work in process 24800 30% 7440 Total equivalent unit 105760

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