Question

Gamboge Company manufactures chocolate bars. The total cost per equivalent unit is $2.50. The expected spoiled units were 10 percent of total production. The number of good units produced in the month of June were 50,000 units, and the number of spoiled units were 4,500 units. All the units were 100 percent complete. Determine the cost of goods transferred out for the month of June.

a.$125,000
b.$15,000
c.$136,250
d.$11,250

Answer 1

The cost of goods transferred out for Gamboge Company for the month of June is calculated by multiplying the number of good units produced (50,000 units) by the total cost per equivalent unit ($2.50), resulting in $125,000.

Step-by-step explanation:

To determine the cost of goods transferred out for the month of June for Gamboge Company, which manufactures chocolate bars, we must first calculate the number of good units and then multiply it by the total cost per equivalent unit. Given that the number of good units produced is 50,000 and the total cost per equivalent unit is $2.50, we ignore the spoiled units as they do not contribute to the cost of goods transferred out. Therefore, the calculation is as follows:

• Number of good units produced: 50,000 units
• Total cost per equivalent unit: $2.50
• Cost of goods transferred out = Number of good units × Total cost per equivalent unit
• Cost of goods transferred out = 50,000 units × $2.50
• Cost of goods transferred out = $125,000

Therefore, the correct answer is a. $125,000.