Marlow Corporation uses the first-in, first-out method in its process costing system. Department A's beginning work in process inventory consisted of 12,000 units, 100% complete with respect to materials and 60% complete with respect to conversion costs. The total cost of this inventory was $76,400. A total of 25,000 units were transferred out during the month. The costs per equivalent unit were computed to be $3.40 for materials and $4.70 for conversion costs. The cost of the units completed and transferred out was closest to:
A) $195,540
B) $146,100
C) $202,500
D) $204,260

Question

Quizplus · Accepted Answer

The cost of units completed and transferred out includes the cost of beginning work in process inventory and the cost of work done during the period. The beginning inventory cost is $76,400. For the units completed and transferred out, we calculate the cost of work done during the period by multiplying the number of equivalent units for materials and conversion by their respective costs per equivalent unit. Since all materials were already 100% complete, we only consider conversion costs for the beginning inventory, and all materials and conversion costs for the new units. The calculation involves determining the equivalent units for the new units and applying the given costs per equivalent unit.

Marlow Corporation Uses the First-In, First-Out Method in Its Process