Question

Nettle Co. uses process costing to account for the production of rubber balls. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 12,000 units for materials and 10,000 units for conversion costs. Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs. April costs were $36,000 for materials and $40,000 for conversion costs. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The equivalent cost per unit for materials using the FIFO method would be closest to:

Answer 1

$3

Step-by-step explanation:

The computation of the equivalent cost per unit for materials using the FIFO method is shown below:

= Materials cost ÷ equivalent units in materials

= $36,000 ÷ 12,000 units

= $3

hence, the equivalent cost per unit for materials using the FIFO method is $3