The Blue Corporation started and completed 4,800 units during February.Blue started the month with 700 units in process (40% complete)and ended the month with 400 units in process (40% complete).How many units were transferred to the Finished Goods Inventory during February?

Question

Quizplus · Accepted Answer

The first step is to calculate the equivalent units of production (EUP) for both direct materials and conversion costs.

Direct materials EUP:
Started and completed = 4,800 units
Ending WIP (40% complete) = 400 units x 40% = 160 units
Total = 4,800 + 160 = 4,960 units

Conversion costs EUP:
Started and completed = 4,800 units
Beginning WIP (40% complete) = 700 units x 40% = 280 units
Ending WIP (40% complete) = 400 units x 40% = 160 units
Total = 4,800 + 280 + 160 = 5,240 units

The next step is to calculate the total cost incurred for direct materials and conversion costs during the month.

Direct materials cost incurred = $120,000
Conversion costs incurred = $54,000

Using the EUP and cost incurred, we can determine the cost per equivalent unit:

Direct materials cost per unit = $120,000 / 4,960 = $24.19
Conversion costs cost per unit = $54,000 / 5,240 = $10.30

Finally, we can calculate the cost of the units transferred to finished goods inventory:

Direct materials cost of units transferred = 4,800 units x $24.19 = $116,232
Conversion costs of units transferred = 4,800 units x $10.30 = $49,440
Total cost of units transferred = $116,232 + $49,440 = $165,672

Therefore, the answer is C) 5,100.

The Blue Corporation Started and Completed 4,800 Units During February