Equivalent Units; Weighted-Average and FIFO Unit Cost Solidad Company calculates the cost for an equivalent unit of production using process costing.
Data for June | |
Work-in-process inventory, June 1: 30,000 units | |
Direct materials: 100 percent complete | $ 60,000 |
Conversion: 20 percent complete | 24,000 |
Balance in work-in-process, June 1 | $ 84,000 |
Units started during June | 50,000 |
Units completed and transferred | 60,000 |
Work-in-process inventory, June 30 | 20,000 |
Direct materials: 100 percent complete |
|
Conversion: 70 percent complete |
|
Cost incurred during June |
|
Direct materials | $120,000 |
Conversion costs |
|
Direct labor | 120,000 |
Applied overhead | 180,000 |
Total conversion costs | $300,000 |
Required
1. Compute cost per equivalent unit for both the weighted-average and FIFO methods.
2. Explain the difference between the FIFO and weighted-average unit costs.
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