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 just-in-time cell for each customer. The following information relates only to one customer's just-in-time 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 production cost for the 1,600 units produced in August:
Total materials cost = 1,600 units x $28 per unit = $44,800
Total labor and overhead cost per unit = $7,370,000 / 27,500 units = $268 per unit
Total labor and overhead cost = 1,600 units x $268 per unit = $428,800

Then, calculate the production costs transferred to Cost of Goods Sold for the 1,380 units shipped:
Cost of Goods Sold = 1,380 units x ($44,800 + $268) per unit = $408,480

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

Sifton Electronics Corporation Manufactures and Assembles Electronic Motor Drives for Video