Index Company Uses the FIFO Method in Its Process Costing

question 58

Multiple Choice

Index Company uses the FIFO method in its process costing system.The first processing department,the Forming Department,started the month with 17,000 units in its beginning work-in-process inventory; the units were 10% complete with respect to conversion costs.The conversion cost in this beginning work-in-process inventory was $9,010.An additional 76,000 units were started into production during the month,and 83,000 units were completed and transferred to the next processing department.There were 10,000 units in the ending work-in-process inventory of the Forming Department; 70% of the units were complete with respect to conversion costs.A total of $445,915 in conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month on the Forming Department's production report? (Round off to three decimal places.)

• A) $5.050.
• B) $5.300.
• C) $5.867.
• D) $5.150.

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Definitions:

Space Occupied

The amount of physical area used by an organization for its operations, often measured in square feet or meters.

Step-Down Method

A cost allocation method used in accounting to assign service department costs to production departments in a sequential manner based on benefits received.

Administration Department

A sector of a business or organization responsible for administrating policies, procedures, and administrative support.

Information Technology

The application of computers, storage systems, networking components, and other tangible devices, frameworks, and methodologies to generate, manipulate, preserve, protect, and share every type of digital data.