Question

Bentley Enterprises uses process costing to control costs in the manufacture of Dust Sensors for the mining industry. The following information pertains to operations for November (CMA Exam adapted) Work in process, November 1st Started in production during November Work in process, November 30th Units 17,880 118,000 25,880 The beginning inventory was 60% complete as to materials and 20% complete as to conversion costs. The ending inventory was 80% complete as to materials and 40% complete as to conversion costs. Costs pertaining to November are as follows: Beginning inventory direct materials, $56,360; direct labor, $22,120, manufacturing overhead, $17,040. Costs incurred during the month: direct materials, $486,000; direct labor, $200,880, manufacturing overhead, 5409.160 What is the equivalent unit cost for the conversion costs assuming Bentley uses first-in, first-out (FIFO) process costing?

Answer 1

Unit transferred out = 17800+118000-25800 = 110000

Equivalent unit of conversion = (17800*80%+25800*40%+92200) = 116760

Cost per equivalent unit of conversion = (200880+409160)/116760 = 5.22

So answer is c) $5.22