Process costing

Watties Beverages, Ltd., of Austrlia makes blended tropical fruit juice. Following information pertains to October production in the production plant, which produces and bottles fruit drinks:

	Units	Materials	Conversion
Work in process, October 1	2,000	70% complete	60% complete
Started in October	10,000
Work in process, October 30	4,000	40% complete	25% complete
Costs:
Work in process October 1		$1,050	$3,240
Added during October		8,200	22,620

Required

1. Calculate cost per equivalent unit for materials and conversion for October and the total cost per equivalent unit using Weighted-average method. Show your calculations.
2. Calculate cost per equivalent unit for materials and conversion for October and the total cost per equivalent unit using FIFO method (Round to two digits after the decimal point where necessary). Show your calculations.
3. The managing director asked you, why should we bother using FIFO? It complicates our report. We could always use weighted-average method which is simpler than FIFO. Write a report to him explaining (i) when it is right, and (ii) when it is not right to use weighted-average method. Use your calculations you did in requirements (a) and (b) to justify your answer.