Use the following to answer questions:
Preston Manufacturing Company has the following information available for its process costing system for the month of May in the finishing department. The finishing department is the second of a multiple-department manufacturing plant. Materials are added at the end of the process in finishing.

Beginning inventory is 30% complete as to conversion costs; ending inventory is 80% complete as to conversion costs.
-The total cost of units transferred out under FIFO is:
A) $1,402,500
B) $ 841,500
C) $1,148,700
D) $ 921,500

Question

Use the following to answer questions:
Preston Manufacturing Company has the following information available for its process costing system for the month of May in the finishing department. The finishing department is the second of a multiple-department manufacturing plant. Materials are added at the end of the process in finishing.
  
Beginning inventory is 30% complete as to conversion costs; ending inventory is 80% complete as to conversion costs.
-The total cost of units transferred out under FIFO is:
A) $1,402,500 
B) $ 841,500 
C) $1,148,700 
D) $ 921,500

Quizplus · Accepted Answer

The total cost of units transferred out under the FIFO (First-In, First-Out) method includes the cost of the oldest inventory first before the newer inventory. The correct total must be calculated based on the specific FIFO layering of costs, which in this case is $1,148,700. This value takes into account the costs associated with the earliest units acquired or produced, which are transferred out first under FIFO accounting.

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