Answer:
$51,000
Explanation:
Equivalent production = 85,000 + [40% × (100,000 - 85,000)] = 91,000 units. Given.
Total Production = 100,00 litres
Completed = 85,000
Material Cost = $38,220
Conversion Cost = 16,380
Beginning work process = 0
End work process = 40%
Uncompleted Production = 100,000 - 85,000 = 15,000
Total Cost = 38,220 + 16,380 = 54,600
First we Calculate the Total Units of Production
This is given by:
Total Units of Production = Completed Production + [40% × (Uncompleted Production)] =
Total Units of Production = 85,000 + [40% × (15,000)]
Total Units of Production = 91,000 units.
Calculating Cost per unit = Total Cost/Total Units
Cost per unit = ($38,220 + $16,380)/91,000
Cost Per Unit = $0.60;
Cost Transferred = Materials Cost * Cost Per Unit
Costs Transferred = 85,000 × $0.60 = $51,000
Answer:
Cost transfered to finished goods= $51,000
Explanation:
In this production process the target production was 100,000 litres. In February 85,000 litres was completed.
So the balance uncompleted is 100,000- 85,000= 15,000 litres
Of this 15,000 40% was eventually completed. That is 0.4* 15,000= 6,000 litres
Therefore
Equivalent production= 85,000+ 6,000
Equivalent production= 91,000 litres
Cost per litre = (Material cost+ Conversion cost)/Number of litres
Cost per litre= (38,220+16,380)/91,000
Cost per litre= 54,600/91,000= $0.6
Cost transfered to finished goods= Cost per litre* Completed goods
Cost transfered to finished goods=0.6* 85,000
Cost transfered to finished goods= $51,000
