Calculation of unit costs-fife method


Calculation of Unit Costs-Fife Method. The Choate Corporation employs a process cost system to accumulate costs for its Product CHOA. Inventories, costs, and production data for the month of October are shown below.

Sept. 30

Oct. 31

Raw materials

100,000 lbs.

80,000 lbs.

Raw materials cost


Work in process inventories:

All materials, 40%, complete as to labor and


20,000 units


$ 84,000

All materials, 33 1/3% complete as to labor and


30,000 units

Finished goods inventory

40,000 units

24,000 units



Purchases of raw materials

440,000 lbs. @ $1.10 per lb.

Transferred to production

460,000 lbs.

Production ratio: 2 lbs:l unit of CHOA

Completed during the month

220,000 units

Materials and units are costed on the fifo method

Direct labor


Factory overhead



(1) Equivalent production units for materials, labor, and factory overhead.

(2) Unit costs for the three cost elements.

(3) Cost of units transferred to finished goods inventory, using the fifo method,

(4) Cost of ending inventory work in process, in detail.

(5) Number of units sold and the cost of the finished goods inventory on October 31 using the: (a) fifo method; (b) average cost method; (c) cost difference per unit and in total.

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Accounting Basics: Calculation of unit costs-fife method
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