LDR Manufacturing produces a chemical pesticide and uses process costing.There are three processing departments-Mixing,Refining,and Packaging.On January 1,2014,the first department-Mixing-had no beginning inventory.During January,40,000 fl.oz.of chemicals were started in production.Of these,32,000 fl.oz.were completed and 8,000 fl.oz.remained in process.In the Mixing Department,all direct materials are added at the beginning of the production process and conversion costs are applied evenly through the process. At the end of January,the equivalent unit data for the Mixing Department were as follows:

- In addition to the above,the costs per equivalent unit were $1.20 for direct materials and $5.75 for conversion costs.Using this data,calculate the cost of the units that were transferred out of the Mixing Department and into the Refining Department.

Question

LDR Manufacturing produces a chemical pesticide and uses process costing.There are three processing departments-Mixing,Refining,and Packaging.On January 1,2014,the first department-Mixing-had no beginning inventory.During January,40,000 fl.oz.of chemicals were started in production.Of these,32,000 fl.oz.were completed and 8,000 fl.oz.remained in process.In the Mixing Department,all direct materials are added at the beginning of the production process and conversion costs are applied evenly through the process. At the end of January,the equivalent unit data for the Mixing Department were as follows:

- In addition to the above,the costs per equivalent unit were $1.20 for direct materials and $5.75 for conversion costs.Using this data,calculate the cost of the units that were transferred out of the Mixing Department and into the Refining Department.

Quizplus · Accepted Answer

To calculate the cost of units transferred out from the Mixing department, we need to calculate the equivalent units for both direct materials and conversion costs separately.
Equivalent units of direct materials = Units completed + (units in ending work in process * percentage of completion)
Equivalent units of direct materials = 32,000 + (8,000 * 100%) = 40,000
Equivalent units of conversion costs = Equivalent units of direct materials = 40,000

Total cost of direct materials = Equivalent units of direct materials * Cost per equivalent unit of direct materials
Total cost of direct materials = 40,000 * $1.20 = $48,000
Total cost of conversion costs = Equivalent units of conversion costs * Cost per equivalent unit of conversion costs
Total cost of conversion costs = 40,000 * $5.75 = $230,000

Total cost of units transferred out = Total cost of direct materials + Total cost of conversion costs
Total cost of units transferred out = $48,000 + $230,000 = $278,000

Therefore, the correct answer is C) $222,400, which is the cost of units that were transferred out of the Mixing Department and into the Refining Department.

LDR Manufacturing Produces a Chemical Pesticide and Uses Process Costing