Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates only to one customer's lean cell for the coming year. Projected labor and overhead, $7,370,000; materials costs, $28 per unit. Planned production included 4,000 hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped amounted to 1,380 units.
From the foregoing information, determine the production costs transferred to Cost of Goods Sold during August.
A) $369,840
B) $408,480
C) $428,800
D) $473,600

Question

Quizplus · Accepted Answer

First, calculate the total materials cost for August:
1,600 units produced x $28 per unit = $44,800

Next, calculate the cost per unit for labor and overhead:
$7,370,000 / 27,500 units = $268 per unit

Multiply the cost per unit by the number of units shipped to get the production cost transferred to Cost of Goods Sold:
1,380 units shipped x $268 per unit = $370,440

Add the materials cost to the production cost transferred to get the total production costs transferred to Cost of Goods Sold:
$44,800 + $370,440 = $415,240

Therefore, the closest answer is B) $408,480.

Sifton Electronics Corporation Manufactures and Assembles Electronic Motor Drives for Video