Ibarra Corporation Uses the First-In, First-Out Method in Its Process

question 74

Multiple Choice

Ibarra Corporation uses the first-in, first-out method in its process costing system. The first processing department, the Forming Department, started the month with 16,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $19,250. An additional 97,000 units were started into production during the month and 100,000 units were completed and transferred to the next processing department. There were 13,000 units in the ending work in process inventory of the Forming Department that were 30% complete with respect to conversion costs. A total of $593,123 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:

• A) $6.100
• B) $5.890
• C) $5.422
• D) $6.115

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Definitions:

AFL and CIO Split

The historical division between the American Federation of Labor and the Congress of Industrial Organizations, two major US labor unions.

Craft Lines

Work fields or professions that emphasize skilled manual labor and specialized craftsmanship in producing goods.

Industry Lines

Distinctions that categorize the varied types of business activities based on their main production processes or the sector they belong to.

Collective Bargaining

A negotiation process between employers and a group of employees aimed at reaching agreements to regulate working conditions.