Rare Bhd. produces Rare Q in a lengthy mixing and cooling process. Base materials are introduced at the start of this process, and further chemicals are added when it is 80% complete. Each kilogram of base materials produces 1 kilogram of Rare Q.

Data for October are:

Opening work in process: 40 kg of base materials, 25% processed

Cost of opening work in process: Base materials RM1,550

Processing RM720

Costs incurred in October: Base materials (80 kg) RM3,400

Conversion costs RM6,864

Further chemicals RM7,200

Closing work in process: 50kg of base materials, 90% processed

Finished output: 65 kg of Rare Q.

Under normal conditions there are no losses of base materials in this process. However, in October, 5kg of partially complete Rare Q were spoiled immediately after the further chemicals had been added. The 5kg of spoiled Rare Q were not processed to finished goods stage and were sold for a total of RM200. Using the FIFO method, calculate the value of Cost of conversion cost per equivalent unit.

Question 10Answer

a. RM57.20

b. RM60.00

c. RM60.21

d. RM66.00