(Appendix 6A)Roger Company uses the FIFO method in its process costing system.The following data are taken from the accounting records of a particular department for June:
What is the cost of the 75,000 units transferred out of the department during June?
A) $151,250.
B) $145,250.
C) $131,500.
D) $168,750.Cost of units transferred out then = $17,500 + 8,000 * $0.50 + 55,000 * $2.25 = $145,250

Question

(Appendix 6A)Roger Company uses the FIFO method in its process costing system.The following data are taken from the accounting records of a particular department for June: 
What is the cost of the 75,000 units transferred out of the department during June?
A) $151,250. 
B) $145,250. 
C) $131,500. 
D) $168,750.Cost of units transferred out then = $17,500 + 8,000 * $0.50 + 55,000 * $2.25 = $145,250

Quizplus · Accepted Answer

The cost of units transferred out is calculated using the FIFO method, which means that the costs of the first 8,000 units are $0.50 each (the starting inventory cost), the costs of the next 55,000 units are $2.25 each (the cost of the 10,000 units added on June 15th plus the cost of the 45,000 units added on June 18th), and the costs of the last 12,000 units are $2.50 each (the cost of the 10,000 units added on June 25th plus the cost of the 2,000 units added on June 27th). Therefore, the total cost of units transferred out during June is $17,500 + (8,000 * $0.50) + (55,000 * $2.25) = $145,250.

(Appendix 6A)Roger Company Uses the FIFO Method in Its Process