Question

A company uses a process cost accounting system and the FIFO inventory valuation method. Its Assembly Department's beginning inventory consisted of 50,000 units, three-fourths complete with respect to direct labor and overhead. The department started and finished 127,500 units this period. The ending inventory consists of 40,000 units that are one-fourth complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. Goods in Process included direct labor costs of $24,000 and overhead costs of $32,000 for the period. The direct labor cost per equivalent unit is:A. $0.126B. $0.160C. $0.178D. $0.213E. $0.373

Answer 1

Answer:

B. $0.160

Explanation:

Start and Finished                                        127,500

Ending Inventory 40,000 x 1/4 complete =  10,000

Beginning 50,000 x 1/4 incompleted =        12,500

Total equivalent units 150,000

It will be, the started and completed, pus the ending inventory portion

and the work done on the beginning inventory to finish it.

Now cost would be: cost / equivalent units:

Labor Cost: 24,000

cost for labor: 24,000/150,000 = 0.16