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 of production using the FIFO method, we need to first calculate the equivalent units of production for both direct materials and conversion costs.

For direct materials:
Units completed and transferred out = 26,750
Units in ending work in process = 3,750
Total units accounted for = 30,500

Equivalent units of production = Units completed and transferred out + (Units in ending work in process × % complete)
Equivalent units of production = 26,750 + (3,750 × 80%) = 29,750

Total cost of direct materials = $140,400
Total cost per equivalent unit of direct materials = Total cost of direct materials ÷ Equivalent units of production
Total cost per equivalent unit of direct materials = $140,400 ÷ 29,750 = $4.72

For conversion costs:
Equivalent units of production = Equivalent units of production for direct materials
Total cost of conversion costs = $231,360
Total cost per equivalent unit of conversion costs = Total cost of conversion costs ÷ Equivalent units of production
Total cost per equivalent unit of conversion costs = $231,360 ÷ 29,750 = $7.78

Total cost per equivalent unit of production = Total cost per equivalent unit of direct materials + Total cost per equivalent unit of conversion costs
Total cost per equivalent unit of production = $4.72 + $7.78 = $12.50

Therefore, the closest option to our calculation is option B: $13.20.

Figure 6-11 Rawlings, Inc. Manufactures a Product That Passes Through Two Processes