Crafton Corporation Crafton Corporation has the following information for the current month:
All materials are added at the start of the production process.Crafton Corporation inspects goods at 75 percent completion as to conversion.
Refer to Crafton Corporation.Assume that the costs per EUP for material and conversion are $1.00 and $1.50,respectively.What is the amount of the period cost for July using FIFO?

Question

Crafton Corporation Crafton Corporation has the following information for the current month:
 All materials are added at the start of the production process.Crafton Corporation inspects goods at 75 percent completion as to conversion.
Refer to Crafton Corporation.Assume that the costs per EUP for material and conversion are $1.00 and $1.50,respectively.What is the amount of the period cost for July using FIFO?

Quizplus · Accepted Answer

To calculate the period cost using FIFO, we need to first calculate the equivalent units of production (EUP) for both materials and conversion.

Materials EUP = Units completed and transferred out + (Units in ending WIP inventory x % completion)
Conversion EUP = Units completed and transferred out + (Units in ending WIP inventory x % completion)

Units completed and transferred out = 40,000
Units in ending WIP inventory = 10,000
% completion for conversion = 75%

Materials EUP = 40,000 + (10,000 x 100%) = 50,000
Conversion EUP = 40,000 + (10,000 x 75%) = 47,500

Next, we can calculate the cost per EUP:

Materials cost per EUP = $1.00
Conversion cost per EUP = $1.50

Using FIFO, we first calculate the cost of the units completed and transferred out:

Materials cost = 50,000 x $1.00 = $50,000
Conversion cost = 40,000 x $1.50 = $60,000

Next, we calculate the cost of the units in ending WIP inventory:

Materials cost = 10,000 x $1.00 = $10,000
Conversion cost = 10,000 x 75% x $1.50 = $11,250

Total period cost = Cost of units completed and transferred out + Cost of units in ending WIP inventory
Total period cost = $50,000 + $60,000 + $10,000 + $11,250 = $131,250

However, we are only asked for the amount of the period cost for July, so the correct answer is:

C) $10,625

Crafton Corporation Crafton Corporation Has the Following Information for the Current