The Morgan Models company manufactures replica plastic airplane and motorised vehicle models.During October,the firm's Assembly Department started production of 60 000 models.During the month,the firm completed 66 000 models,and transferred them to the Finishing Department.The firm ended the month with 22 000 models in ending inventory.There were 28 000 models 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 Morgan.Beginning work in process was 25% complete as to conversion costs,while ending work in process was 50% complete as to conversion costs.
Beginning inventory:
$$\begin{array}{l}
\begin{array} { l l }
\text { Direct materials costs } & \$ 39200 \
\text { Conversion costs } & \$ 30800
\end{array}\\
\text { Manufacturing costs added during the acounting period: }\\
\begin{array} { l c }
\text { Direct materials costs } & \$ 90000 \
\text { Conversion costs } & \$ 280000
\end{array}
\end{array}$$
-What is the cost of the goods transferred out during October?

Question

The Morgan Models company manufactures replica plastic airplane and motorised vehicle models.During October,the firm's Assembly Department started production of 60 000 models.During the month,the firm completed 66 000 models,and transferred them to the Finishing Department.The firm ended the month with 22 000 models in ending inventory.There were 28 000 models 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 Morgan.Beginning work in process was 25% complete as to conversion costs,while ending work in process was 50% complete as to conversion costs.
Beginning inventory:
 $$\begin{array}{l}
\begin{array} { l l } 
\text { Direct materials costs } & \$ 39200 \
\text { Conversion costs } & \$ 30800
\end{array}\\
\text { Manufacturing costs added during the acounting period: }\\
\begin{array} { l c } 
\text { Direct materials costs } & \$ 90000 \
\text { Conversion costs } & \$ 280000
\end{array}
\end{array}$$
-What is the cost of the goods transferred out during October?

Quizplus · Accepted Answer

The cost of goods transferred out is calculated using the FIFO method. First, calculate the equivalent units for conversion costs and direct materials. Then, determine the cost per equivalent unit for both direct materials and conversion costs. Finally, calculate the cost of goods transferred out by adding the cost of beginning inventory to the cost of units started and completed during the period.

The Morgan Models Company Manufactures Replica Plastic Airplane and Motorised