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# The Penn 061400 managerial accounting exam, FIFO method of

### Customer Question

The Penn Foster 061400 managerial accounting exam
Customer: FIFO method of equivalent units and cost
JA: Is there anything else important you think the Tutor should know?
Customer: In particular the formula for determining the cost per equivalent unit for conversion costs
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Submitted: 1 year ago.
Customer: replied 1 year ago.
The exact questions is According to the company's records, the conversion cost if beginning work in process inventory was \$1,656 at the beginning of March. Additional conversion cost of \$129,960 were incurred in the department during the month. What is the cost per equivalent unit for conversion costs? The beginning WIP is 4,500 units, Transferred in from the prior department during March is 74,000, completed and transferred to the next department during March 74,500 and the ending WIP is 4,000.
Expert:  linda_us replied 1 year ago.

Hi

Welcome to the site, I can help you with these question. I am working on it and will post the solution in 1-2 hours.

Expert:  linda_us replied 1 year ago.

Since method to be followed and percentage completion in not given, solving it as per Weighted Average

Total Units to be accounted = 74500+4000 = 79500

Cost per Equivalent unit = (1656+129960)/79500= 1.6555 or 1.66

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I was able to located a similar question in which percentage completion for beginning inventory was 20% and ending inventory was 60%. Method to be followed was FIFO.

Based on above the solution will be

Total Units to be accounted = 4500*80% + 70000 + 4000*60% = 76000

Cost per Equivalent unit = (129960)/76000= 1.71

Expert:  linda_us replied 1 year ago.

I read the first part of chat again and found method (FIFO) needs to be followed. You can ignore the weighted Average method calculation.

Solution based on FIFO method would be

Total Units to be accounted = 4500*80% + 70000 + 4000*60% = 76000

Cost per Equivalent unit = (129960)/76000= 1.71

If you have any other questions please let me know and I would be happy to help you.