Jennifer is the head cost accountant for Pure Inc., a factory that produces hand sanitizer. Pure has recently experienced an uptick in sales and has been refining their accounting policies. Jennifer has been tasked with gathering data pertaining to their costs for the most recent month, June. She has gathered the following information:

What amount of the cost of Conversion Costs will be included in the calculation of equivalent cost per unit using First-In, First-Out (FIFO) and the Weighted-Average (WA) method, respectively?

Question

Jennifer is the head cost accountant for Pure Inc., a factory that produces hand sanitizer. Pure has recently experienced an uptick in sales and has been refining their accounting policies. Jennifer has been tasked with gathering data pertaining to their costs for the most recent month, June. She has gathered the following information:

What amount of the cost of Conversion Costs will be included in the calculation of equivalent cost per unit using First-In, First-Out (FIFO) and the Weighted-Average (WA) method, respectively?

Quizplus · Accepted Answer

This question requires a grasp on how to calculate the Conversion Cost that will ultimately be included in the calculation of equivalent cost per unit. Under FIFO, this calculation will not include the beginning inventory, but using the Weighted-Average method will include all accumulated costs. For FIFO, it will be amount added during June of $24,389. Using the Weighted-Average method, the calculation will be the combined total of what was present at the beginning and what was added during June: $8,232 + $24,389 = $32,621.

Jennifer Is the Head Cost Accountant for Pure Inc