Imbram Corporation Uses the FIFO Method in Its Process Costing

question 37

Multiple Choice

Imbram Corporation uses the FIFO method in its process costing system.The first processing department,the Forming Department,started the month with 23,000 units in its beginning work in process inventory that were 40% complete with respect to conversion costs.The conversion cost in this beginning work in process inventory was $27,692.An additional 86,000 units were started into production during the month and 86,000 units were completed and transferred to the next processing department.There were 23,000 units in the ending work in process inventory of the Forming Department that were 10% complete with respect to conversion costs.A total of $221,480 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)$2.80
• B)$2.29
• C)$3.01
• D)$2.58

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Definitions:

Inputs

The resources such as labor, materials, and capital that are used in the production process to create goods and services.

AFC

Acronym that stands for Average Fixed Cost, the fixed costs of production divided by the quantity of output produced.

ATC

Average Total Cost, which is the total cost of production divided by the number of goods produced.

Output

The total amount of goods or services produced by a company, industry, or economy within a specific period.