Pete's Gold Co. is a factory that produces gold plastic coins that are sold at party stores around the country. They are attempting to determine whether they would prefer to use the First-In, First-Out (FIFO) or Weighted-Average method for their process costing. Their unit production information for the most recent year is as follows:
The units above produced the following costs:
If Pete's chooses to use the FIFO method, then what is their equivalent cost per unit for Conversion Costs? (Round units to whole number and cost to two decimal places.)

Question

Pete's Gold Co. is a factory that produces gold plastic coins that are sold at party stores around the country. They are attempting to determine whether they would prefer to use the First-In, First-Out (FIFO) or Weighted-Average method for their process costing. Their unit production information for the most recent year is as follows:
 The units above produced the following costs:
 If Pete's chooses to use the FIFO method, then what is their equivalent cost per unit for Conversion Costs? (Round units to whole number and cost to two decimal places.)

Quizplus · Accepted Answer

This question requires calculation of both the equivalent units and equivalent costs for Conversion Costs using FIFO before calculating the equivalent cost per unit. For the equivalent units, account for the beginning inventory separately before combining. (3,600 × 48%) + (28,121 × 100%) + (2,788 × 73%) = 1,728 + 28,121 + 2,035 = 31,884 units. To calculate the equivalent costs, only use the costs added during the period of $16,904. Now, divide the cost by the number of equivalent units that were calculated. $16,904/31,884 = $0.53 per unit.