Question

PC Refinery uses a FIFO process costing system. For a particular period, its opening inventory consisted of 100 items (60 per cent complete as to conversion costs) whose costs were $1,600 made up of material $300 and conversion cost $1,300. During the month, 1,000 items were started and 950 were completed. Ending inventory of WIP was one-third complete. There was no spoilage. Costs placed in process during the month were materials $1,785 and conversion costs $13,865. Materials are added at the halfway point. What is the amount of cost that would be allocated to goods completed in the period?

(a) $16,900.

(b) $16,513.

(c) $16,150.

(d) $14,913.

Answer 1

		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, beginning	100	0	40
Started and completed in month	850	850	850
Transferred and completed in Month	950	850	890
Inventory in process, ending	150	0	50
Total units to be assigned costs	1100	850	940
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Costs placed in process during the month		1785	13865
Total equivalent units		850	940
Cost per equivalent unit		2.1	14.75
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, beginning balance			1600
To complete inventory in process, Beginning		590	590	(40*14.75)
Cost of completed beginning work in process			2190	(1600+590)
Started and completed in month	1785	12538	14323	(850*2.1)+(850*14.75)
Cost of goods completed in the period			16513	(2190+14323)
Option B is correct