Question

In: Accounting

Carmelita Inc., has the following information available: Costs from Beginning Inventory Costs from Current Period Direct...

Carmelita Inc., has the following information available:

Costs from
Beginning Inventory
Costs from
Current Period
Direct materials $4,100          $26,400     
Conversion costs 6,000          156,900     

At the beginning of the period, there were 500 units in process that were 44% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 5,200 units were started and completed. Ending inventory contained 400 units that were 33% complete as to conversion costs and 100% complete as to materials costs. Assume that the company uses the FIFO process cost method. Round cost per unit figures to two cents, i.e., $2.22, when calculating total costs.

The total costs that will be transferred into Finished Goods for units started and completed were

a.$243,326

b.$113,822

c.$169,884

d.$182,952

Solutions

Expert Solution

Solution :

The Answer is (c) $ 169,884.

Working :

Step 1 : Computation of Equivaent Units for this period  as per FIFO method :

Units Material Conversion
% of Completion EU % of Completion EU
Opening Units 500 56% 280
Units Started and Transferred 5,200 100% 5,200 100% 5,200
Total 5,700 5,200 5,480
Ending Inventory 400 100% 400 33% 132
Total 6,100 5,600 5,612

Step 2 : Cost per Equivalent Units :

Material Conversion
Cost Incurred during the period $ 26,400 $ 156,900
Equivalent Units 5,600 $ 5,612
Cost per EU $ 4.71 $ 27,.96

Step 3 : Cost of Units started and Transferred this Period :

Material Conversion
Cost of Cuurent period 5,200 * $ 4.71 = $ 24,492 5,200 * $ 27.96 = $ 145,392
Total $ 24,492 $ 145,392

Total Cost of Units started and completed = $ 24,492 + $ 145,392 = $ 169,884

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