(Appendix 4A)Creer Company uses the FIFO method in its process costing system.Department A had 20,000 units in process at the beginning of January,and 40% were complete with respect to conversion costs.All materials are added at the beginning of the process in Department A.The January 1 work-in-process inventory in Department A contained $10,000 in materials cost and $11,600 in conversion cost.During January,materials costs were $0.50 per equivalent unit,and conversion costs were $1.50 per equivalent unit.All of the units in the beginning work-in-process inventory were completed and transferred out during the month.What was the total cost attached to these units when they were transferred to the next department?
A) $39,600.
B) $33,600.
C) $45,600.
D) $37,600.

Question

Quizplus · Accepted Answer

The total cost includes the beginning inventory costs and the costs added during the month. The beginning inventory had $10,000 in materials and $11,600 in conversion costs. Since the units were 40% complete, 60% of conversion costs were added in January. For 20,000 units, the additional conversion cost is 20,000 units * 60% * $1.50 = $18,000. The total cost is $10,000 + $11,600 + $18,000 = $39,600.

(Appendix 4A)Creer Company Uses the FIFO Method in Its Process