Figure 6-11 Rawlings, Inc. manufactures a product that passes through two processes: mixing and molding. All manufacturing costs are added uniformly in the Mixing Department. Information for the Mixing Department for January follows:
During January, 26,750 units were completed and transferred to the Molding Department. The following costs were incurred by the Mixing Department during January:
Refer to Figure 6-11. There were 3,750 units that were 80 percent complete remaining in Mixing at January 31. Total cost per equivalent unit of production using the FIFO method is

Question

Figure 6-11 Rawlings, Inc. manufactures a product that passes through two processes: mixing and molding. All manufacturing costs are added uniformly in the Mixing Department. Information for the Mixing Department for January follows:
 During January, 26,750 units were completed and transferred to the Molding Department. The following costs were incurred by the Mixing Department during January:
 Refer to Figure 6-11. There were 3,750 units that were 80 percent complete remaining in Mixing at January 31. Total cost per equivalent unit of production using the FIFO method is

Quizplus · Accepted Answer

To calculate the total cost per equivalent unit using the FIFO method, we need to first calculate the cost per equivalent unit for each cost element.

For direct materials, total cost is $60,200 and total equivalent units are 26,750 + (3,750 x 80%) = 29,500. Therefore, the cost per equivalent unit for direct materials is:

$60,200 / 29,500 = $2.04

For conversion costs, total cost is $198,100 and total equivalent units are 26,750 + (3,750 x 80%) = 29,500. Therefore, the cost per equivalent unit for conversion costs is:

$198,100 / 29,500 = $6.72

Now, we can calculate the total cost per equivalent unit using the FIFO method:

$2.04 (direct materials) + $6.72 (conversion costs) = $8.76

Therefore, the total cost per equivalent unit using the FIFO method is $8.76. To get the answer, we need to add the cost added in current period to first in and then divide it with equivalent unit.

As 26,750 equivalent units were completed and transferred out, the total cost would be:

$8.76 x 26,750 = $234,210

Then, we add 3,750 x 80% = 3,000 equivalent units of work in process to the calculation:

$2.04 (direct materials) + $6.72 (conversion costs) = $8.76 x 3,000 = $26,280

So the total cost of work in process inventory is $26,280

Adding the two amounts together:

$234,210 + $26,280 = $260,490

Then, to get the total cost per equivalent unit of production, we divide this amount by the total equivalent units produced:

$260,490 / 26,750 + (3,750 x 80%) = $13.20

Therefore, the total cost per equivalent unit of production using the FIFO method is $13.20, and the correct answer is B.