Asked by Blair Harrell on Apr 29, 2024
Verified
Using the FIFO method, the cost per equivalent unit for materials used during July was
A) $10.78
B) $10.33
C) $9.78
D) $10.65
FIFO Method
An inventory valuation method where the first goods purchased or produced are the first ones removed from inventory and sold, standing for "first-in, first-out."
Equivalent Unit
An equivalent unit measures a portion of completed goods in terms of an equal number of fully completed units, used in cost accounting to assess production and inventory.
- Determine the expense per equivalent unit with respect to both materials and conversion costs.
Verified Answer
Total cost of materials used during July = $41,320
Equivalent units of materials used during July = (13,870 units transferred out x 1) + (3,930 units in ending inventory x 100% complete) = 17,800
Cost per equivalent unit for materials used during July = $41,320 ÷ 17,800 = $10.33 (rounded to the nearest cent)
Learning Objectives
- Determine the expense per equivalent unit with respect to both materials and conversion costs.
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