Realm Company uses process costing and had an equivalent cost of $2.30 per unit for direct materials and $1.80 per unit for conversion costs during May in its Rolling Department. There were 11,600 units completed and transferred to Finished Goods, and 1,000 units in ending Work in Process inventory that were 80% complete with respect to direct material and 60% complete with respect to conversion costs. How much is the cost of completed goods transferred to Finished Goods from the Rolling Department?

Question

Quizplus · Accepted Answer

The cost of completed goods transferred to Finished Goods from the Rolling Department is $47,560. This is calculated as follows:Equivalent units for direct materials = 11,600 units + (1,000 units x 80%) = 12,480 unitsEquivalent units for conversion costs = 11,600 units + (1,000 units x 60%) = 12,200 unitsCost of completed goods transferred to Finished Goods = (12,480 units x $2.30 per unit) + (12,200 units x $1.80 per unit) = $47,560

Realm Company Uses Process Costing and Had an Equivalent Cost