Figure 6-12 Reed Company manufactures steno pads.There are two processes: printing and binding.
The following information is given for the printing department for November.

The company uses FIFO inventory assumption.
-
Refer to Figure 6-12.What are the FIFO cost per unit for materials?

Question

Figure 6-12 Reed Company manufactures steno pads.There are two processes: printing and binding.
The following information is given for the printing department for November.

The company uses FIFO inventory assumption.
- 
Refer to Figure 6-12.What are the FIFO cost per unit for materials?

Quizplus · Accepted Answer

To calculate the FIFO cost per unit for materials, we need to first calculate the equivalent units of production for materials. 
Equivalent units of production = Units completed + (Ending inventory * percentage of completion)
Units completed = 300,000 units 
Ending inventory = 50,000 units 
Percentage of completion for ending inventory = 25% 
Equivalent units of production for materials = 300,000 + (50,000 * 25%) = 312,500

Now, let's calculate the cost per equivalent unit for materials: 
Cost per equivalent unit = (Beginning inventory costs + Current costs) / Equivalent units of production 
Beginning inventory costs = $6,080 
Current costs = $220,875 
Total costs = $226,955

Cost per equivalent unit = ($6,080 + $220,875) / 312,500 = $0.75

Therefore, the FIFO cost per unit for materials is $0.75.

Figure 6-12 Reed Company Manufactures Steno Pads