Answer the following questions using the information below:
Dustin Plastics, Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production.
Data for Department A for February 2012 are:
Costs for Department A for February 2012 are:

-How many units were completed and transferred out of Department A during February?
A)100 units
B)600 units
C)700 units
D)800 units

Question

Answer the following questions using the information below:
Dustin Plastics, Inc., manufactures plastic moldings for car seats. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through Department A and Department B. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production.
Data for Department A for February 2012 are:
  Costs for Department A for February 2012 are:
 
-How many units were completed and transferred out of Department A during February?
A)100 units 
B)600 units 
C)700 units 
D)800 units

Quizplus · Accepted Answer

The question doesn't provide the units completed in Department A, but it does provide the total cost incurred in Department A. Since the costing system only has two categories (direct materials and conversion costs), we can assume that the total cost incurred in Department A is the sum of the direct materials cost and conversion costs incurred during the month. Therefore, we cannot calculate the cost per unit for each category, but we can use the total cost incurred to calculate the total production cost per unit. If we assume that all the units produced in Department A were completed and transferred out during February, we can divide the total cost incurred by the total number of units produced to get the production cost per unit. The production cost per unit can be added to the production cost per unit incurred in Department B to get the total production cost per unit for the product. However, since the question only asks for the number of units completed and transferred out of Department A, we can conclude that the answer is C, 700 units.

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