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

Using the FIFO method, the units completed and transferred out during the month were 6,000 (the 5,000 units from beginning inventory plus 10,000 units started during the month, minus the 9,000 ending inventory). 
The period cost for material is $1.00 x 6,000 EUPs = $6,000. 
The period cost for conversion is $1.50 x 6,000 EUPs = $9,000. 
The total period cost is $6,000 + $9,000 = $15,000. However, Crafton inspects goods at 75% completion, so only 75% of the conversion cost relates to the units completed and transferred out, which is $9,000 x 75% = $6,750. 
Therefore, the amount of period cost for July using FIFO is $6,000 + $6,750 = $10,750, which is closest to option C ($10,625).

Crafton Corporation Crafton Corporation Has the Following Information for the Current