Question

) FIFO Aluminum processes a single type of aluminum. During the current period the following information was given:

	Units	Material Costs	Conversion Costs
Beginning Inventory	4800	$5700	$6600
Started During the Current Period	20,800	49,200	67,000
Ending Inventory	2900

All materials are added at the beginning of the production process. The beginning inventory was 35% complete as to conversion, while the ending inventory was 40% completed for conversion purposes.

FIFO Aluminum uses the first-in, first-out system of process costing.

What were the costs assigned to the units transferred out this period (Round intermediary calculations to the nearest cent)?

A) $114,391

B) $118,203

C) $246,250

D) $153,004

ANSWER IS B) $118,203, CAN SOMEONE SHOW THE WORK WHY THAT IS PLEASE

Answer 1

• Please follow the following working to know how to arrive at correct answer.
• Step 1: Calculate Units transferred

Units Reconciliation
Units to account for:
Beginning WIP	4,800
Units started this period	20,800
Total Units to account for	25,600
Total Units accounted for:
Completed & Transferred out	22,700 [25600 – 2900]
Ending WIP	2,900
Total Units accounted for	25,600

• Step 2: Calculation of Equivalent Units

EUP - FIFO Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units of ENDING WIP	2,900	100%	2,900	40%	1,160
Units STARTED & COMPLETED	17,900	100%	17,900	100%	17,900
Units of beginning WIP	4,800	0% [it was already complete]	-	65% [100% - 35%]	3,120
Equivalent Units of Production			20,800		22,180

• Step 3: Calculation of Cost per Equivalent units

COST per EUP			Material		Conversion
Cost incurred this period			$          49,200.00		$                    67,000.00
Total Costs		Costs	$          49,200.00	Costs	$                    67,000.00
Equivalent units of production		EUP	20,800	EUP	22,180
Cost per EUP			$             2.37		$                        3.02

• Step 4: Final Step – Answer Calculation (using data of Step 2 and Step 3)

Cost Transferred out:	EUP [calculated in Step 2]	Cost per EUP [calculated in Step 3]	Total Cost
Cost of Beginning WIP			$          12,300.00
Cost to complete beginning WIP-
- Direct Materials	-	$                   2.37	$                         -
- Conversion	3,120	$                   3.02	$            9,422.40
Total cost to complete beginning WIP			$          21,722
Cost of Units started & completed this period:	EUP [calculated in Step 2]	Cost per EUP [calculated in Step 3]	Total Cost
- Direct Materials	17,900	$                   2.37	$          42,423.00
- Conversion	17,900	$                   3.02	$          54,058.00
Total costs started & Completed this period			$          96,481
Total cost of work finished this period				$      118,203 = Answer

• Correct Answer = Option ‘B’ $ 118,203