Question

hayek corporation uses the fifo method in its process costing. the following data concern the company’s mixing department for the month of august.

	materials	conversion
cost added to production in the mixing department during august	$91,332	$81,864
equivalent units of production for august	7,740	7,580

required:
what are the cost per equivalent unit for materials and the cost per equivalent for conversion for the mixing department for august using the fifo method?

Explanation:

Step1: Calculate cost per equivalent unit for materials

Under FIFO, we use the cost added during the period for the cost per equivalent unit (since FIFO focuses on current period costs for units started and completed and the work done on beginning WIP). For materials, the cost added during August is $91,332 and equivalent units are 7,740.
Cost per equivalent unit (materials) = $\frac{\text{Cost added during August (materials)}}{\text{Equivalent units (materials)}}$ = $\frac{91332}{7740}$

Step2: Calculate cost per equivalent unit for conversion

Similarly, for conversion, cost added during August is $81,864 and equivalent units are 7,580.
Cost per equivalent unit (conversion) = $\frac{\text{Cost added during August (conversion)}}{\text{Equivalent units (conversion)}}$ = $\frac{81864}{7580}$

Now, compute the values:
For materials: $\frac{91332}{7740} = 11.8$ (since 91332 ÷ 7740 = 11.8)
For conversion: $\frac{81864}{7580} = 10.8$ (since 81864 ÷ 7580 = 10.8)

Answer:

Cost per equivalent unit for materials: $\boldsymbol{\$11.80}$
Cost per equivalent unit for conversion: $\boldsymbol{\$10.80}$