Question

Answer the following questions using the information below: The Recliner Company manufacturers a standard massage chair. During February, the firm's Assembly Department started production of 150,000 chairs. During the month, the firm completed 170,000 chairs and transferred them to the Finishing Department. The firm ended the month with 20,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used byRecliner. Conversion costs are incurred uniformly over the production cycle. Beginning inventory was 70% complete as to conversion costs and ending inventory was 40% complete as to conversion costs. The beginning inventory was $200,000 and $118,560 for direct materials and conversion costs, respectively. The Recliner Company spent $408,000 and $330,000 for direct materials and conversion costs during February, respectively. What is the cost of goods completed and transferred during the month?

Answer 1

$972,400

Explanation:

Step 1: Flow of goods calculation

Units transferred out	170000
Add: WIP Ending inventory	20000
Less: Units started during the period	150000
WIP, beginning inventory	40000

Step 2: Equivalent unit calculation

Flow of Production	Physical units	Direct materials	Conversion
Work in process, beginning	40,000
Started during period	150,000
To account for	190,000
Good units completed	170,000	170,000	170,000
Work in process, ending	20,000	20,000	8,000
Equivalent units	190,000	190,000	178,000

Step 3: Calculation of cost per equivalent unit:

Costs	Totals	Direct Materials	Conversion
Work in process, beginning	$318,560	$200,000	$118,560
Costs added during period	$738,000	$408,000	$330,000
Total costs to account for	$1,056,560	$608,000	$448,560
Divided by equivalent units		190000	178,000
Equivalent unit costs	5.72	3.2	2.52

Step 4: Assignment of cost

Cost of goods completed and transferred during the month:

= units transferred out × Total cost per equivalent unit

= 170,000 × $5.72

= $972,400