Ibarra Corporation Uses the FIFO Method in Its Process Costing

question 11

Multiple Choice

Ibarra Corporation uses the FIFO 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:

Income Statement

A financial statement that shows a company’s revenue and expenses over a specified period of time, resulting in net profit or loss.

Liability

Financial obligations or debts owed by a business to external parties, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Goods

Tangible products or merchandise that are manufactured, bought, and sold in commerce.

Services

The action of helping or doing work for someone, often producing intangible benefits.