Reid Company Uses a Process Costing System in Which Units

question 55

Multiple Choice

Reid Company uses a process costing system in which units go through several departments. In the Cutting Department for June, units in the beginning work-in-process inventory were 80% complete with respect to conversion costs. Units in the ending work-in-process inventory were 25% complete with respect to conversion costs. Other data for the department for June are as follows:
$\begin{array} { l | r | r | } \hline & \text { Units } & \text { Conversion costs } \\\hline \begin{array} { l } \text { Work in process inventory } \\\text { on June 1 }\end{array} & 15,000 & \$ 50,200 \\\hline \begin{array} { l } \text { Units started into } \\\text { production }\end{array} & 145,000 \\\hline \begin{array} { l } \text { Conversion costs incurred } \\\text { during June }\end{array} & & \$ 175,700 \\\hline \begin{array} { l } \text { Units completed and } \\\text { transferred to the next } \\\text { department during June }\end{array} & 130,000 & \\\hline\end{array}$


- Assuming that the company uses the FIFO cost method,what is the cost per equivalent unit for conversion costs for June,rounded to the nearest cent?

• A) $1.80.
• B) $1.40.
• C) $1.64.
• D) $1.35.

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Definitions:

Specific Identification Method

An inventory costing method that assigns costs to individual items or batches of products, accurately tracking inventory costs.

Ending Inventory

The financial worth of goods up for sale at the termination of an accounting interval.

Cost Calculation

The process of determining the costs associated with producing a product or offering a service, considering all relevant expenses.

Periodic FIFO

An inventory valuation method where goods are sold based on the assumption that the oldest inventory items are sold first.