(Appendix 4A)Using the FIFO method,the cost per equivalent unit of materials for May is closest to which of the following?
A) $4.12.
B) $4.50.
C) $4.60.
D) $4.80.

Question

Quizplus · Accepted Answer

Under the FIFO method, the cost of the first items purchased is assigned to the units sold first, while the cost of the last items purchased is assigned to the units remaining in inventory. Thus, the cost per equivalent unit of materials for May can be calculated as follows:

Total cost of materials for May / Total equivalent units of materials for May
= ($24,600 + $22,400) / (5,000 + 1,000)
= $47,000 / 6,000
= $7.83 per equivalent unit

Since there was no beginning inventory of materials, the cost per equivalent unit for the ending inventory for May will be equal to the cost of the last items purchased in May, which was $4.50.

Therefore, the answer is B.

(Appendix 4A)Using the FIFO Method,the Cost Per Equivalent Unit of Materials