(Appendix 4A) Owens Corporation uses a process costing system. For March, the beginning work in process inventory consisted of 60,000 units that were 60% complete with respect to processing. The ending work in process inventory for the month consisted of units that were 20% complete with respect to processing. A summary of unit and cost data for the month follows:

-Assuming that Owens Corporation uses the FIFO method,which of the following is closest to the cost per equivalent unit for processing cost for March?
A) $3.23
B) $3.98
C) $4.02
D) $4.22

Question

(Appendix 4A) Owens Corporation uses a process costing system. For March, the beginning work in process inventory consisted of 60,000 units that were 60% complete with respect to processing. The ending work in process inventory for the month consisted of units that were 20% complete with respect to processing. A summary of unit and cost data for the month follows:
 
-Assuming that Owens Corporation uses the FIFO method,which of the following is closest to the cost per equivalent unit for processing cost for March?
A) $3.23 
B) $3.98 
C) $4.02 
D) $4.22

Quizplus · Accepted Answer

Units in beginning work in process inventory + Units started into production or transferred in = Units in ending work in process inventory + Units completed and transferred out
60,000 + 190,000 = Units in ending work in process inventory + 200,000
Units in ending work in process inventory = 60,000 + 190,000 - 200,000 = 50,000
FIFO method equivalent units of production
 11ea7761_18c6_8de5_81a5_0b7710fa0eea_TB2580_00 FIFO method cost per equivalent unit
 11ea7761_18c6_8de6_81a5_051bf73f249f_TB2580_00

(Appendix 4A) Owens Corporation Uses a Process Costing System