Jeffery Ltd uses a process costing system.Its Spackling Department had no beginning Work in Process inventory.The department added direct materials of $200,000 and conversion costs of $321,300 during the period.Materials are added at the beginning of the process and conversion costs are added evenly throughout the process.During the period 75,000 units were completed, and at the end of the period, 5,000 units remained which were 30% complete.How much is transferred to the Finished Goods inventory account during the period?
A)$521,300
B)$488,719
C)$502,500
D)$556,053

Question

Quizplus · Accepted Answer

The cost transferred to Finished Goods is based on the completed units. The cost per unit is calculated by dividing total costs by equivalent units. Total costs = $200,000 (materials) + $321,300 (conversion) = $521,300. Equivalent units for conversion = 75,000 + (5,000 * 30%) = 76,500. Cost per equivalent unit = $521,300 / 76,500 = $6.8157. Cost transferred = 75,000 units * $6.8157 = $511,178. However, since materials are added at the beginning, the cost for materials for 75,000 units is $200,000. Conversion cost for 75,000 units = 75,000 * ($321,300 / 76,500) = $302,500. Total transferred = $200,000 + $302,500 = $502,500.

Jeffery Ltd Uses a Process Costing System