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Eban Corporation uses the FIFO method in its process costing system. The first processing department, the...

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Accounting

Eban Corporation uses the FIFO method in its process costingsystem. The first processing department, the Welding Department,started the month with 22,200 units in its beginning work inprocess inventory that were 50% complete with respect to conversioncosts. The conversion cost in this beginning work in processinventory was $66,200. An additional 69,000 units were started intoproduction during the month. There were 18,800 units in the endingwork in process inventory of the Welding Department that were 20%complete with respect to conversion costs. A total of $312,160 inconversion costs were incurred in the department during themonth.

The cost per equivalent unit for conversion costs is closestto:

Answer & Explanation Solved by verified expert
4.4 Ratings (643 Votes)

The cost per equivalent unit for conversion costs is closest to: $4.80

Working

STEP 1 (FIFO)
Reconciliation of Units
Units % already completed % completed this period
Conversion cost Conversion cost
Beginning WIP             22,200 50% 50%
Units introduced             69,000
Total units to be accounted for             91,200
Completed and Transferred unit             72,400 0% 100%
Ending WIP             18,800 0% 20%

.

STEP 2 (FIFO)
Equivalent Units
Total Units Conversion cost
Units Transferred: % completed this period Equivalent Units
From WIP             22,200 50%                        11,100
From units started/Introduced             50,200 100%                        50,200
Total             72,400                        61,300
Total Units Conversion cost
Ending WIP % completed this period Equivalent Units
Total             18,800 20%                          3,760
Total EUP             91,200                        65,060

.

Conversion cost
Cost incurred in Current Period $ 312,160
Total Equivalent Units 65,060
Cost per Equivalent Units $ 4.80

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