Health Beverage Corporation uses a process costing system to collect costs related to the production of its celery flavored cola. The cola is first processed in a Mixing Department at Health and is then transferred out and finished up in the Bottling Department. The finished cases of cola are then transferred to Finished Goods Inventory. The following information relates to Health's two departments for the month of January: How many cases of cola were completed and transferred to Finished Goods Inventory during January?
A)66,000
B)71,000
C)72,000
D)74,000

Question

Health Beverage Corporation uses a process costing system to collect costs related to the production of its celery flavored cola. The cola is first processed in a Mixing Department at Health and is then transferred out and finished up in the Bottling Department. The finished cases of cola are then transferred to Finished Goods Inventory. The following information relates to Health's two departments for the month of January:  How many cases of cola were completed and transferred to Finished Goods Inventory during January?
A)66,000 
B)71,000 
C)72,000 
D)74,000

Quizplus · Accepted Answer

To determine the number of cases completed and transferred to Finished Goods Inventory, we need to look at the units accounted for in the Bottling Department, which is where the cola is finished up and transferred to Finished Goods Inventory.

According to the information given, the Bottling Department started the month with 10,000 units (cases) in beginning inventory, received 72,000 units from the Mixing Department during the month, and had 10,000 units in ending inventory.

Using the formula for units accounted for in the Bottling Department:

Units accounted for = Beginning inventory + Units transferred in - Ending inventory

Units accounted for = 10,000 + 72,000 - 10,000 
Units accounted for = 72,000

Therefore, 72,000 cases of cola were completed and transferred to Finished Goods Inventory during January. The answer is C.

Health Beverage Corporation Uses a Process Costing System to Collect