Question
The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day.
The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day.
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| Beginning WIP inventory |
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| Direct materials | $ | 975 |
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| Conversion costs |
| 542 |
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| Current period costs |
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| Direct materials |
| 23,520 |
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| Conversion costs |
| 16,555 |
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Quantity information is obtained from the manufacturing records and includes the following.
Required:
a. Compute the equivalent units for the materials and conversion cost calculations.
b. Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method.
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| Beginning inventory | 750 | units | (60% complete as to materials, 56% complete as to conversion) |
| Current period units started | 5,800 | units |
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| Ending inventory | 2,000 | units | (40% complete as to materials, 30% complete as to conversion) |
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