The following information is available for Department ABC for the month of September:
Materials are added at the beginning of the process. (Round unit costs to two decimal places.)

-Refer to the Figure.What would be Department ABC's cost of goods transferred out when using the FIFO method?
A)$40,250
B)$44,500
C)$45,540
D)$45,775

Question

The following information is available for Department ABC for the month of September:
Materials are added at the beginning of the process. (Round unit costs to two decimal places.)
 
-Refer to the Figure.What would be Department ABC's cost of goods transferred out when using the FIFO method?
A)$40,250 
B)$44,500 
C)$45,540 
D)$45,775

Quizplus · Accepted Answer

Department ABC's cost of goods transferred out when using the FIFO method is calculated as follows:

- Beginning inventory cost: 2,000 units x $2.75 = $5,500
- Add costs of units started and completed in September: 
  - 4,000 units x $3.50 = $14,000 
  - 3,000 units x $4.25 = $12,750 
  - Total = $26,250
- Total cost to account for: $5,500 + $26,250 = $31,750
- Less ending inventory cost: 3,000 units x $4.25 = $12,750
- Cost of goods transferred out: $31,750 - $12,750 = $19,000
- Add cost of ending inventory: $12,750
- Total cost of goods accounted for: $31,750
- Total cost of goods transferred out: $19,000 + $12,750 = $31,750

Therefore, Department ABC's cost of goods transferred out using the FIFO method is $31,750, and the closest option is D ($45,775).

The Following Information Is Available for Department ABC for the Month