Question

Charlie Chairs Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for Department A for February 2017 are: Work in process, beginning inventory, 30% converted 200 units Units started during February 800 units Work in process, ending inventory 240 units Costs for Department A for February 2017 are: Work in process, beginning inventory: Direct materials $150,000 Conversion costs $210,000 Direct materials costs added during February $603,000 Conversion costs added during February $429,000 How many units were completed and transferred out of Department A during February

Answer 1

Units transferred out = 760

Step-by-step explanation:

If we assume that all units are completed in the order of arrival i.e (FIFO), then the units transferred out is the sum of the opening inventory and the units started and completed in the period. The units started and completed in the period is referred to fully-worked.

Fully worked is computed as the units started in the period less the closing inventory .

Fully- worked = 800 - 240 = 560

The units transferred out = opening inventory + Fully-worked

= 200 + 560 = 760

Units transferred out = 760

Note we assumed that the units of the inventory( started last period i.e January) would be worked on first in the month of February before any other units. So, it is assumed completed by the end of February