[Anonymous]

I’m having trouble with this concept. I understand

step 1 Fifo is Beg WIP*(1-%complete) +(units completed -Beg WIP) + (Ending WIP* % complete)=Equivalent units.

Weighted average is the completed product during the period+(ending WIP *%complete)=Equivalent units.

I can find Eq. units but struggle at the step below. It seems like in most problems the current and beginning costs are plug numbers.

step 2 is to calculate cost per unit

Fifo current cost/Eq units=cost per unit

Lifo (Beg cost + current cost)/Eq units=cost per unit

Is this correct? Also what is considered beg and current cost? materials DL, DM? This has got me confused. What am I missing?

[Anonymous]

So I feel comfortable calculating EU but can't figure out how to get conversion costs. In this example how do you get $143,000?

Multiple Choice

Question 5 of 20 COST-0013

The Cutting Department is the first stage of Mark Company’s production cycle. Conversion costs for this department were 80% complete as to the beginning work in process and 50% complete as to the ending work in process. Information as to conversion costs in the Cutting Department for January 2012 is as follows:

Units Conversion costs

Work in process at January 1, 2012 25,000 $22,000

Units started and costs incurred during January 135,000 $143,000

Units completed and transferred to next department during January 100,000

Using the FIFO method, what was the conversion cost of the work in process in the Cutting Department at January 31, 2012?

$38,100

$39,000

$45,000

$33,000

Units completed 100,000

EU in ending WIP (60,000) (50%) 30,000

130,000

EU in beginning WIP (25,000) (20,000)

(80%)

EU of production 110,000

EWIP = 160,000 units to account for – 100,000 units completed = 60,000 units.

The next step is to compute equivalent units of production (EU) under the FIFO method:

Units completed 100,000

EU in ending WIP (60,000) (50%) 30,000

130,000

EU in beginning WIP (25,000) (20,000)

(80%)

EU of production 110,000

Conversion cost per unit for the current period is $143,000/110,000 or $1.30 per equivalent unit. The cost of the ending WIP equals the equivalent units in ending WIP times the conversion cost per unit of $1.30:

(30,000) ($1.30) = $39,000

[Anonymous]

Ignore all this the information was given in the problem and I didn't see it.

[Author]

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