Question

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

Answer 1

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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