Question

Carmelita Inc. has the following information available:

	Costs from Beginning Inventory	Costs from Current Period
Direct materials	$4,800	$28,900
Conversion costs	6,600	150,900

At the beginning of the period, there were 600 units in process that were 42% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,600 units were started and completed. Ending inventory contained 400 units that were 30% 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 the nearest cent when calculating total costs.

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

a.$163,576

b.$177,800

c.$231,140

d.$114,503

Answer 1

Solution:

Carmelita Inc.
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	600
Units started this period	5000
Total unit to be accounted for	5600
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 58%	600	0	348
Started and completed currently	4600	4600	4600
Transferred to finished goods	5200	4600	4948
Units in ending WIP Material - 100% Conversion - 30%	400	400	120
Total units accounted for	5600	5000	5068

Carmelita Inc.
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$179,800.00	$28,900.00	$150,900.00
Equivalent units		5000	5068
Cost per equivalent unit		$5.78	$29.78

Cost of units started and completed during the period = 4600 * ($5.78 + $29.78) = $163,576

Hence option a is correct.