Mercury Corporation Material A is added at the start of production, while Material B is added uniformly throughout the process.
Refer to Mercury Corporation Assuming a FIFO method of process costing, compute the average cost per EUP for Material B.

Question

Mercury Corporation  Material A is added at the start of production, while Material B is added uniformly throughout the process.
Refer to Mercury Corporation Assuming a FIFO method of process costing, compute the average cost per EUP for Material B.

Quizplus · Accepted Answer

In FIFO method, the units completed and transferred out are assigned the cost of the earliest units in the process. Therefore, Material B's cost would be the total cost of Material B divided by the total equivalent units (EUP) of production:

Total cost of Material B = $325,000
Total EUP of production = 10,400

Average cost per EUP for Material B = $325,000 / 10,400 = $31.25

Therefore, the best choice is B with the explanation provided above.

Mercury Corporation Material a Is Added at the Start