Carmelita Inc., has the following information available: At the beginning of the
ID: 2536579 • Letter: C
Question
Carmelita Inc., has the following information available:
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
Costs from Beginning Inventory Costs from current Period Direct materials $4,600 $28,200 Conversion costs 6,000 155,300Explanation / Answer
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