Materials costs of $300,000 and conversion costs of $321,300 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 100,000 units were started into production in September, and there were 8,000 units in ending work in process that were 40% complete at the end of September.
What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September?
A) $276,000.
B) $586,500.
C) $621,300.
D) $637,800.

Question

Quizplus · Accepted Answer

Total manufacturing costs incurred = materials costs + conversion costs
Total manufacturing costs incurred = $300,000 + $321,300 = $621,300

For units completed and transferred out, only 100,000 - 8,000 = 92,000 units were fully completed in September without any units in beginning work in process. Therefore, the total cost assigned to completed units = $621,300 / 100,000 units * 92,000 units = $570,060.

However, the question asks for the manufacturing costs assigned to those units that were completed AND transferred out. We know that 8,000 units were not fully completed and were in ending work in process. Since these units are 40% complete, we can calculate the equivalent units of production for conversion costs as 8,000 units * 40% = 3,200 equivalent units of production. Therefore, the total cost assigned to these 3,200 units is $321,300 / 100,000 units * 3,200 equivalent units = $10,304.

Adding these two amounts together gives us $570,060 + $10,304 = $580,364. However, we need to remember that this is the cost assigned to completed units, and we want the cost assigned to completed and transferred out units. We don't have any information on the actual number of units transferred out, but we know that the 8,000 units in ending work in process are not part of the completed and transferred out units. Therefore, the answer that best fits is B) $586,500, which is the closest value to $580,364, accounting for the 8,000 units in ending work in process that were not transferred out.

Materials Costs of $300,000 and Conversion Costs of $321,300 Were