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Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities:On July 1: Beginning inventories 850 units, 60% completeDirect materials cost $5,000Conversion costs $4,000During July: Number of units started 15,000Direct materials added $155,000Conversion costs added $83,520On July 31: Ending inventories 1,600 units, 40% completeUsing the FIFO method, the cost per equivalent unit for materials used during July was $10.78 $10.33 $9.78 $10.65

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phpastorino

Answer:

Cost per EUP Materials: $10,33

Explanation:

Beginning WIP Units: 850 (850 x 100%)

Units Completed:  850 + 15,000 - 1,600 = 14,250

Ending WIP Units: 1,600 (1,600 x 100%)

Equivalent Units of Production (FIFO): Units Completed and Transferred Out + Equivalent Units in ending WIP - Equivalent Units in Beginning WIP

EUP Materials: 14,250 + 1,600 - 850 = 15,000

Cost per Equivalent Unit (FIFO): Total Cost Incurred in the Period / Equivalent Units of Production  

Cost per EUP Materials: $155,000 / 15,000 = $10,33

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