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The Rest-A-Lot chair company manufactures a standard recliner. During February, the firm's Assembly Department started production...

The Rest-A-Lot chair company manufactures a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs. The firm ended the monh with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All directy material costs are added at the beg. of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Rest-a-Lot. Beginning work in process was 30% complete as to conversion costs, while ending work in process wa 80% complete to conversion costs. Beginning inventory costs: Direct materials $24,000 Conversion Costs $35,000 Manufacturing costs added during the accoutng period: Direct materials: $168,000 Conversion Costs: $278,000

What is the cost of the goods transferred out during February?

Solutions

Expert Solution

Answer : 455365

Calculation :

Beginning WIP of 15000 units (100% Complete as to material & 30% Complete as to conversion cost) :

Out of 75000 units introduced during the month, 65000 units are 100% complete as to material & conversion cost

Closing WIP of 10000 units (100% complete as to material & 80% complete as to conversion Cost.

So,

Equivalent Unit as to material = 75000 (65000*100%+10000*100%)

Equivalent Unit as to Conversion Cost = 83500 (15000*70%+65000*100%+10000*80%)

Material cost to be allocated to transferred unit = Beginning WIP Cost + During the month allocated cost

= 24000 + (168000/75000*65000)

= 169600

Coversion cost to be allocated to transferred unit = Beginning WIP Cost + During the month allocated cost

= 35000 + (278000/83500*75500)

= 286365

Total Cost = 169600 + 286365

                    = 455365

ekkarill92 answered 1 year ago
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