A Company Uses the FIFO Method for Inventory Costing

question 67

Multiple Choice

A company uses the FIFO method for inventory costing.At the start of the period the production department had 20,000 units in beginning Work in Process inventory which were 40% complete;the department completed and transferred 165,000 units.At the end of the period,22,000 units were in the ending Work in Process inventory and are 75% complete.The production department had labor costs in the beginning goods is process inventory of $99,000 and total labor costs added during the period are $726,825.Compute the equivalent cost per unit for labor.

• A)$4.40.
• B)$4.76.
• C)$4.19.
• D)$4.55.
• E)$4.61.

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Definitions:

Depreciable Cost

Depreciable cost is the cost of a fixed asset that is subject to depreciation over its useful life, excluding salvage value.

Depreciation Rate

A percentage rate used to calculate the decrease in value of an asset over time for accounting and tax purposes.

Units-of-Activity

A depreciation method that allocates the cost of an asset over its useful life based on the units it produces or hours it operates.

Straight-Line Depreciation

is a method of depreciating an asset where the asset's cost is evenly spread over its useful life, resulting in equal depreciation expenses each year.