Question

The accountant for Whirly Manufacturing Inc. gathered the following information for the month of November:

Beginning WIP		16,000 units
Started production		100,000
Completed production		92,000
Ending WIP		24,000

The beginning inventory was 60% complete for materials and 20% complete for conversion costs. The ending inventory was 90% complete for materials and 40% complete for conversion costs.

Costs pertaining to the month of November are as follows:
Beginning inventory costs are:
Materials		$54,560
Direct labour		20,320
Factory overhead		15,240
Costs incurred during November include:
Materials		$468,000
Direct labour		182,880
Factory overhead		391,160

Using the FIFO method, the equivalent unit conversion cost for November is: (please show calculation)

$5.65

$5.83

$6.00

$6.20

Answer 1

To complete Beginning WIP	12800	=16000*(1-20%)
Units started and Completed	76000	=92000-16000
Ending WIP	9600	=24000*40%
The equivalent units conversion cost	98400
Conversion Costs incurred during November	574040	=182880+391160
Divide by Equivalent units	98400
The equivalent unit conversion cost	5.83
Option B $5.83 is correct