Crafton Corporation Crafton Corporation has the following information for the current month:
All materials are added at the start of the production process. Crafton Corporation inspects goods at 75 percent completion as to conversion.
Refer to Crafton Corporation. Assume that the costs per EUP for material and conversion are $1.00 and $1.50, respectively. Using FIFO, what is the total cost assigned to the transferred-out units (rounded to the nearest dollar)?

Question

Crafton Corporation Crafton Corporation has the following information for the current month:
 All materials are added at the start of the production process. Crafton Corporation inspects goods at 75 percent completion as to conversion.
Refer to Crafton Corporation. Assume that the costs per EUP for material and conversion are $1.00 and $1.50, respectively. Using FIFO, what is the total cost assigned to the transferred-out units (rounded to the nearest dollar)?

Quizplus · Accepted Answer

Using FIFO, we calculate the equivalent units of production (EUP) for material and conversion separately. For material, the EUP is:
Beginning inventory: 0
Plus: Units started and completed (60,000)
Plus: Units in ending inventory (10,000 x 90%) = 9,000
Total EUP for material: 69,000
The cost per EUP for material is $1.00, so the total cost for material is $69,000.

For conversion, the EUP is:
Beginning inventory: 0
Plus: Units started and completed (60,000)
Plus: Units in ending inventory (10,000 x 75%) = 7,500
Total EUP for conversion: 67,500
The cost per EUP for conversion is $1.50, so the total cost for conversion is $101,250.

The total cost assigned to the transferred-out units is the sum of the costs for material and conversion, which is:
$69,000 + $101,250 = $170,250
However, we need to adjust for the 10,000 units in ending inventory (25% complete for conversion) by multiplying the total cost for conversion by 25%, which is:
$101,250 x 25% = $25,312.50
So the total cost assigned to the transferred-out units is:
$170,250 - $25,312.50 = $144,937.50, which rounded to the nearest dollar is $244,438. Therefore, the correct answer is B.

Crafton Corporation Crafton Corporation Has the Following Information for the Current