he Bakersfield Company has the following information available: At the beginning of the period, there were 800 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs. During the current period, 5,800 units were started and completed. Ending inventory contained 400 units that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs. (Assume that the company uses the FIFO process costing method.)
The cost of completing a unit during the current period was
A) $30.12.
B) $27.60.
C) $28.18.
D) $24.96.

Question

he Bakersfield Company has the following information available:  At the beginning of the period, there were 800 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs. During the current period, 5,800 units were started and completed. Ending inventory contained 400 units that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs. (Assume that the company uses the FIFO process costing method.)
The cost of completing a unit during the current period was
A) $30.12. 
B) $27.60. 
C) $28.18. 
D) $24.96.

Quizplus · Accepted Answer

Using the FIFO method, we need to calculate the equivalent units of production for direct materials and conversion costs separately.

Direct Materials:
Beginning inventory = 800 units x 100% complete = 800 units
Current period production = 5,800 units x 100% complete = 5,800 units
Ending inventory = 400 units x 100% complete = 400 units
Total equivalent units of production = 7,000 units

Conversion Costs:
Beginning inventory = 800 units x 60% complete = 480 units
Current period production = 5,800 units x 100% complete = 5,800 units
Ending inventory = 400 units x 60% complete = 240 units
Total equivalent units of production = 6,080 units

Next, we need to calculate the total cost incurred during the current period:
Beginning inventory costs = $35,000
Current period costs = $198,000
Total costs = $233,000

Finally, we can calculate the cost per equivalent unit:
Cost per equivalent unit of direct materials = Total costs / Total equivalent units of production for direct materials = $233,000 / 7,000 units = $33.29
Cost per equivalent unit of conversion costs = Total costs / Total equivalent units of production for conversion costs = $233,000 / 6,080 units = $38.34

The cost per unit completed during the current period is the sum of the cost per equivalent unit of direct materials and the cost per equivalent unit of conversion costs:
Cost per unit = $33.29 + $38.34 = $71.63

Therefore, the cost of completing a unit during the current period was $27.60 ($71.63 - $35.03 beginning inventory cost per unit).

He Bakersfield Company Has the Following Information Available: at the Beginning