(CMA)The accountant for Whirly Manufacturing Inc. gathered the following information for the month of November: Beginning WIP 16,000 units
Started production 100,000
Completed production 92,000
Ending WIP 24,000
The beginning inventory was 60% complete for materials and 20% complete for conversion costs. The ending inventory was 90% complete for materials and 40% complete for conversion costs.
Costs pertaining to the month of November are as follows:
Beginning inventory costs are:
Materials $54,560
Direct labour 20,320
Factory overhead 15,240
Costs incurred during November include:
Materials $468,000
Direct labour 182,880
Factory overhead 391,160
Using the FIFO method, the equivalent unit conversion cost for November is:

Question

Quizplus · Accepted Answer

To calculate the equivalent unit conversion cost, we need to determine the number of units that are completed and partially completed during the period, and then calculate the equivalent unit cost for direct labor and factory overhead.

For November, we have the following data:

- Units completed: 92,000
- Units in ending WIP: 24,000 (40% complete for conversion costs)

To calculate the equivalent units:

- Completed units: 92,000 units x 1 = 92,000 equivalent units
- Ending WIP: 24,000 units x 40% = 9,600 equivalent units

Total equivalent units for conversion costs = 92,000 + 9,600 = 101,600 equivalent units

To calculate the total conversion costs for the period, we add the direct labor costs and factory overhead costs:

- Direct labor: $182,880
- Factory overhead: $391,160

Total conversion costs = $574,040

To calculate the equivalent unit conversion cost, we divide the total conversion costs by the total equivalent units:

Equivalent unit conversion cost = Total conversion costs / Total equivalent units
Equivalent unit conversion cost = $574,040 / 101,600
Equivalent unit conversion cost = $5.65

Therefore, the answer is B.

(CMA)The Accountant for Whirly Manufacturing Inc