Zuniga, Inc. uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: On May 1: Beginning inventories $ =250 $ units, $ 40 \% $ complete
Direct materials costs $ =\$ 1,250 $
Conversion costs $ =\$ 1,356 $
Transferred-in costs $ =\$ 2,560 $

During May: Direct materials costs incurred $ =\$ 6,000 $ Conversion costs incurred $ =\$ 17,013 $

On May 31: Ending Inventories $ =350 $ units, $ 20 \% $ complete Using the FIFO method, the cost of the beginning work in process units transferred out was:
A) $2,385
B) $15,476
C) $7,551
D) $6,756

Question

Zuniga, Inc. uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: On May 1: Beginning inventories $ =250 $ units, $ 40 \% $ complete
Direct materials costs $ =\$ 1,250 $
Conversion costs $ =\$ 1,356 $
Transferred-in costs $ =\$ 2,560 $

During May: Direct materials costs incurred $ =\$ 6,000 $ Conversion costs incurred $ =\$ 17,013 $

On May 31: Ending Inventories $ =350 $ units, $ 20 \% $ complete Using the FIFO method, the cost of the beginning work in process units transferred out was:
A) $2,385
B) $15,476
C) $7,551
D) $6,756

Quizplus · Accepted Answer

The cost of the beginning work in process units transferred out includes the costs associated with the beginning inventory (direct materials, conversion costs, and transferred-in costs) plus the costs needed to complete those units (additional conversion costs since direct materials are added at the beginning). The correct calculation involves determining the cost to complete the beginning inventory units and adding it to the beginning costs, which aligns with option C's value.

Zuniga, Inc =250 =250 =250 Units 40% 40 \% 40% Complete Direct Materials Costs

Zuniga, Inc $=250$ Units $40 \%$ Complete
Direct Materials Costs