Question

Carmelita Inc., has the following information available:

	Costs from Beginning Inventory	Costs from current Period
Direct materials	$4,600	$28,200
Conversion costs	6,000	155,300

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, 5,500 units were started and completed. Ending inventory contained 300 units that were 35% 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.$244,688

b.$111,719

c.$181,250

d.$171,875

Answer 1

Ans: c. $181250

Using FIFO process cost method:

Equivalent units for direct material= 5500+300=5800

Equivalent units for conversion costs=(500*56%)+5500+(300*35%)

                                                                            = 280+5500+105

                                                                            = 5885

Unit started and completed= 500+5500-340=5660

Equivalent cost per unit for direct material= 32800/5800=5.65

Equivalent cost per unit for conversion costs= 161300/5885=27.40

Total cost transferred into finished good for units started and completed:

Direct materials= 5.65*5660=$31979

Conversion costs= 27.40*5660=$155084

Total costs=$187063