Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,000 chairs. During the month, the firm completed 78,600 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,100 chairs in ending inventory. There were 15,700 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 35% complete as to conversion costs, while ending work in process was 85% complete as to conversion costs.

What is the cost of the goods transferred out during February?
(Round intermediary calculations to the nearest cent.)

Question

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,000 chairs. During the month, the firm completed 78,600 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,100 chairs in ending inventory. There were 15,700 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 35% complete as to conversion costs, while ending work in process was 85% complete as to conversion costs.

What is the cost of the goods transferred out during February?
(Round intermediary calculations to the nearest cent.)

Quizplus · Accepted Answer

Number of units started and completed during February = 73,000 chairs (Units started in production) - 10,100 chairs (Ending inventory) = 62,900 chairs
Number of equivalent units in beginning inventory = 10,205 (15,700 × 0.65)
Total equivalent units for conversion costs = 10,205 + 62,900 + 8585 = 81,690 units
Direct material cost per unit = $168,500 / 73,000 = $2.31
Direct materials cost assigned to ending work-in-process inventory = $2.31 × 10,100 = $23,331
Work in process, beginning inventory $24,400 + $36,000 = $60,400
Costs added to beginning inventory = 15,700 × 0.65 × $3.41 = $34,799.05
Started and completed
Direct materials = $2.31 × 62,900 =$145,299
Conversion costs =
[$278,500 /(10,205 + 8585 + 62,900)] × 62,900 = $214,489.00
Total costs of units completed and transferred out = $454,987.05

Comfort Chair Company Manufacturers a Standard Recliner