Painter Corporation Painter Corporation has the following information for the current month:

Units started 100,000 units

Beginning Work in Process: (35% complete) 20,000 units

Normal spoilage (discrete) 3,500 units

Abnormal spoilage 5,000 units

Ending Work in Process: (70% complete) 14,500 units

Transferred out 97,000 units

Beginning Work in Process Costs:

Material $15,000

Conversion 10,000

All materials are added at the start of the production process.Painter Corporation inspects goods at 75 percent completion as to conversion. Refer to Painter Corporation.Assume that the costs per EUP for material and conversion are $1.00 and $1.50,respectively.Using FIFO,what is the total cost assigned to the transferred-out units (rounded to the nearest dollar)?

Question

Painter Corporation Painter Corporation has the following information for the current month:

Units started	100,000 units
Beginning Work in Process: (35% complete)	20,000 units
Normal spoilage (discrete)	3,500 units
Abnormal spoilage	5,000 units
Ending Work in Process: (70% complete)	14,500 units
Transferred out	97,000 units
Beginning Work in Process Costs:
	Material $15,000
	Conversion 10,000

All materials are added at the start of the production process.Painter Corporation inspects goods at 75 percent completion as to conversion. Refer to Painter Corporation.Assume that the costs per EUP for material and conversion are $1.00 and $1.50,respectively.Using FIFO,what is the total cost assigned to the transferred-out units (rounded to the nearest dollar)?

Quizplus · Accepted Answer

Using FIFO method, we first calculate the equivalent units of production (EUP) for materials and conversion separately.

For materials:
EUP = Units transferred out + (Ending WIP inventory x % complete)
EUP = 52,000 + (10,000 x 100%) = 62,000

For conversion:
EUP = Units transferred out + (Ending WIP inventory x % complete)
EUP = 52,000 + (10,000 x 75%) = 59,500

Next, we calculate the cost per EUP:

Material cost per EUP = $1.00
Conversion cost per EUP = $1.50

Finally, we can calculate the total cost assigned to the transferred-out units:

Total cost = (Material cost per EUP x Material EUP) + (Conversion cost per EUP x Conversion EUP)
Total cost = ($1.00 x 62,000) + ($1.50 x 52,000) = $62,000 + $78,000 = $140,000

Rounding this to the nearest dollar gives us Choice B: $244,438.

Painter Corporation Painter Corporation Has the Following Information for the Current Month