Solidad Company calculates the cost for an equivalent unit of production using process costing.
Data for June
Work-in-process inventory, June 1: 30,000 units
Direct materials: 100 percent complete .......... $ 60,000
Conversion: 20 percent complete ............. 24,000
Balance in work-in-process, June 1 ............ $ 84,000
Units started during June ............................ 50,000
Units completed and transferred .......................... 60,000
Work-in-process inventory, June 30 ..................... 20,000
Direct materials: 100 percent complete
Conversion: 70 percent complete
Cost incurred during June
Direct materials .................................................... $120,000
Conversion costs
Direct labor .......................................................... 120,000
Applied overhead ....................................................... 180,000
Total conversion costs ................................................ $300,000
Required
1. Compute cost per equivalent unit for both the weighted-average and FIFO methods.
2. Explain the difference between the FIFO and weighted-average unit costs.