Question

Mullins Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:
Units in beginning work in process inventory		1,300
Materials costs	$	12,700
Conversion costs	$	22,800
Percent complete with respect to materials		75	%
Percent complete with respect to conversion		65	%
Units started into production during the month		9,800
Units transferred to the next department during the month		9,000
Materials costs added during the month	$	171,300
Conversion costs added during the month	$	360,500
Ending work in process inventory:
Units in ending work in process inventory		2,100
Percent complete with respect to materials		65	%
Percent complete with respect to conversion		50	%

The cost of a completed unit transferred out of the department is closest to: (Round equivalent units to the nearest whole number and round all other intermediate calculations to 2 decimal places.)

Answer 1

Calculation of Equivalent units
Particulars	Units	Percentage completion			Equivalent units
			Materials	Conversion costs		Materials	Conversion costs
Beginning Inventory	1300		25%	35%		325	455
Units introduced and completed (9000-1300)	7700		100%	100%		7700	7700
Closing inventory	2100		65%	50%		1365	1050
Total
						9390	9205
Calculation of cost per unit ($)
Particulars	Materials	Conversion costs
Cost added during the month	$ 171,300.00	$          360,500.00
Equivalent units	9390	9205
Cost per unit	$            18.24	$                     39.16
Total cost = 18.24+39.16	$            57.40