The Goods in Process Inventory account for the AB Corp. follows:

The cost of units transferred to finished goods is:

Question

The Goods in Process Inventory account for the AB Corp. follows:

The cost of units transferred to finished goods is:

Quizplus · Accepted Answer

To find the cost of units transferred to finished goods, we need to look at the total cost incurred in the production process, minus the cost of ending work in process inventory. From the given data, we can calculate the total cost incurred in the production process as follows:

Beginning work in process inventory $25,000
Plus: Direct materials added $60,000
Plus: Direct labor cost $30,000
Plus: Factory overhead cost $27,000
Total cost incurred in the production process $142,000

The ending work in process inventory is given as follows:

Direct materials $9,000
Direct labor cost $4,500
Factory overhead cost $2,400
Total cost of ending work in process inventory $15,900

Therefore, the cost of units transferred to finished goods is:

Total cost incurred in the production process - Total cost of ending work in process inventory
= $142,000 - $15,900
= $126,100

Hence, the correct answer is C) $88,100, which is the cost of units transferred to finished goods.

The Goods in Process Inventory Account for the AB Corp