Tarten Company uses the FIFO method in its process costing system.Operating data for the Curing Department for the month of March appear below:
$\begin{array}{|l|r|r|}
\hline & \text { Units } & \text { Percentage complete } \
\hline \begin{array}{l}
\text { Beginning work in process } \
\text { inventory }
\end{array} &9,000 &10 \% \
\hline \begin{array}{l}
\text { Transferred in from the } \
\text { prior department during }
\end{array} &57,000 & \
\text {March }\
\hline\text { Completed and transferred }& 65,200 \
\text { to the next department } \
\text { during March } & \
\hline \text { Ending work in process } & 1,000 & 70 \%\
\text { inventory } \
\hline
\end{array}$
According to the company's records,the conversion cost in beginning work-in-process inventory was $7,470 at the beginning of March.The cost per equivalent unit for conversion costs for March was $8.20.
How much conversion cost would be assigned to the units completed and transferred out of the department during March?
A) $525,530.
B) $592,040.
C) $533,090.
D) $533,000.

Question

Tarten Company uses the FIFO method in its process costing system.Operating data for the Curing Department for the month of March appear below:
$\begin{array}{|l|r|r|}
\hline & \text { Units } & \text { Percentage complete } \
\hline \begin{array}{l}
\text { Beginning work in process } \
\text { inventory }
\end{array} &9,000 &10 \% \
\hline \begin{array}{l}
\text { Transferred in from the } \
\text { prior department during }
\end{array} &57,000 & \
\text {March }\
\hline\text { Completed and transferred }& 65,200 \ 
\text { to the next department } \
\text { during March }  & \
\hline \text { Ending work in process } & 1,000 & 70 \%\
\text { inventory }  \ 
\hline
\end{array}$
According to the company's records,the conversion cost in beginning work-in-process inventory was $7,470 at the beginning of March.The cost per equivalent unit for conversion costs for March was $8.20.
How much conversion cost would be assigned to the units completed and transferred out of the department during March?
A) $525,530.
B) $592,040.
C) $533,090.
D) $533,000.

Quizplus · Accepted Answer

To calculate the conversion cost assigned to units completed and transferred out, we need to use the weighted average method.

First, we need to calculate the equivalent units of production for direct materials and conversion costs:

Equivalent units of direct materials = 22,800 + 9,600 + 5,100 = 37,500
Equivalent units of conversion costs = 22,800 + 9,600 + 10,200 = 42,600

Next, we need to calculate the total cost of production for the period:

Beginning WIP inventory conversion cost = $7,470
Cost added during the period = $344,840
Total cost of production = $352,310

Finally, we can calculate the cost per equivalent unit:

Cost per equivalent unit of conversion costs = $352,310 / 42,600 = $8.28

To determine the conversion cost assigned to units completed and transferred out, we can use the following formula:

Conversion cost per equivalent unit * equivalent units of production completed and transferred out = $8.20 * 32,400 = $265,680

Therefore, the correct answer is (C) $533,090. This is because we need to double the cost of completed and transferred out units as we only considered the direct materials cost in the weighted average cost method.

Tarten Company Uses the FIFO Method in Its Process Costing