Question

A company uses process costing to assign product costs. Available inventory information for a period is as follows: Inventory (in units) Direct material cost Conversion cost Beginning 0 Started during the period 15,000 $75,000 $55,500 Transferred out 13,500 End of period 1,500 The ending inventory was 25% complete as to the conversion cost. 100% of direct material was added at the beginning of the process. What was the total cost transferred out

Answer 1

The total cost transferred out is calculated by summing the full direct material cost and conversion costs for the units transferred out. For the provided data, the total cost transferred out for the 13,500 units is $130,500.

Step-by-step explanation:

The student's question relates to the calculation of the total cost transferred out in a company using process costing. To answer this, we need to calculate the costs assigned to the units that were completed and transferred out of the production process during the period.

Direct material is added at 100% at the beginning, so all the units transferred out will have the full direct material cost. For the conversion cost, we consider the 25% completion for the ending inventory. Since 13,500 units are transferred out, the full conversion cost is applied to them.

Total transferred out cost comprises the full direct material and conversion costs of the units transferred out. The calculation is as follows:

• Direct Material Cost: $75,000 (since 100% material is added to all 15,000 units and 13,500 units were transferred out)
• Conversion Cost for Transferred Out units: $55,500 (since 100% of the conversion cost applies to the transferred out units)

Therefore, the total cost transferred out is $75,000 (Direct Material) + $55,500 (Conversion Cost) = $130,500.

Answer 2

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Step-by-step explanation: