Maplewood Co. uses process costing to account for the production of canned energ
ID: 2363662 • Letter: M
Question
Maplewood Co. uses process costing to account for the production of canned energy drinks. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs. April costs were $36,000 for materials and $40,000 for conversion costs. On April 1, there were 2,000 units in beginning inventory (80% complete). During April 10,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 40% for conversion). The cost per unit using the FIFO method would be
$7.9833 $6.9091 $7.0000 $7.2500Explanation / Answer
Answer is option c.
Total costs of materials = Materials in opening WIP +Added during the month
=$7000+$36,000
=$43,000
Total Materials consumed = Completed during the month +Closing inventory - Opening inventory
=10,000 units +4000 units - 2000units (Opening units deducted as these are already included in the completed units)
=12,000 units.
Material cost per unit =$43,000/12,000 units =3.58333