The sewing process used by TradeMark Inc. began the year with an inventory of $3,820 (Direct Materials were 100% complete). Using First-In, First-Out (FIFO), they calculated their equivalent units of production for this year to be:
TradeMark has calculated their cost per equivalent unit as follows: Direct Material (DM) $84 and Conversion Costs (CC) $43. How much cost should TradeMark assign to the units completed and removed from WIP Inventory in the current year?

Question

The sewing process used by TradeMark Inc. began the year with an inventory of $3,820 (Direct Materials were 100% complete). Using First-In, First-Out (FIFO), they calculated their equivalent units of production for this year to be:
 TradeMark has calculated their cost per equivalent unit as follows: Direct Material (DM) $84 and Conversion Costs (CC) $43. How much cost should TradeMark assign to the units completed and removed from WIP Inventory in the current year?

Quizplus · Accepted Answer

This question requires assignment of costs only to the units completed and removed from WIP inventory during the current year which means that ending WIP inventory will not be factored in. Direct Materials: 800 × $84 = $67,200. Conversion Costs: (32 × $43) + (800 × $43) = $1,376 + $34,400 = $35,776. Total Costs: $3,820 + $67,200 + $35,776 = $106,796.

The Sewing Process Used by TradeMark Inc