Question

Use this information about Carmelita Inc. to answer the question that follows.

Carmelita Inc. has the following information available:

Costs from Beginning Inventory Costs from Current Period
Direct materials $5,100 $22,500
Conversion costs 5,900 159,900
At the beginning of the period, there were 600 units in process that were 40% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,600 units were started and completed. Ending inventory contained 400 units that were 35% complete as to conversion costs and 100% complete as to materials costs. Assume that the company uses the FIFO cost flow method. Round cost-per-unit figures to the nearest cent when computing total costs.

The total costs transferred to Finished Goods for units started and completed were

a.$179,250

b.$107,192

c.$164,910

d.$241,988

Answer 1

To calculate the total costs transferred to Finished Goods for units started and completed using the FIFO cost flow method, we need to determine the equivalent units of production and the cost per equivalent unit for both direct materials and conversion costs.

Equivalent units of production for direct materials:

Beginning inventory: 600 units x 100% complete = 600 equivalent units

Current period: 4,600 units x 100% complete = 4,600 equivalent units

Total: 600 equivalent units + 4,600 equivalent units = 5,200 equivalent units

Equivalent units of production for conversion costs:

Beginning inventory: 600 units x 40% complete = 240 equivalent units

Current period: 4,600 units x 100% complete = 4,600 equivalent units

Ending inventory: 400 units x 35% complete = 140 equivalent units

Total: 240 equivalent units + 4,600 equivalent units + 140 equivalent units = 4,980 equivalent units

Cost per equivalent unit for direct materials:

(Costs from Beginning Inventory + Costs from Current Period) / Equivalent units of production

= ($5,100 + $22,500) / 5,200 equivalent units

≈ $4.42 per equivalent unit

Cost per equivalent unit for conversion costs:

(Costs from Beginning Inventory + Costs from Current Period) / Equivalent units of production

= ($5,900 + $159,900) / 4,980 equivalent units

≈ $33.73 per equivalent unit

Total costs transferred to Finished Goods for units started and completed:

(Cost per equivalent unit for direct materials x Equivalent units of production) + (Cost per equivalent unit for conversion costs x Equivalent units of production)

= ($4.42 x 5,200) + ($33.73 x 4,980)

≈ $22,964 + $168,050

≈ $191,014

Therefore, the correct answer is not provided among the options given.