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Crimp Corporation uses the first-in, first-out method in its process costing system. Department A had 10,000 units in process at the beginning of January that were 40% complete with respect to conversion costs. All materials are added at the beginning of the process in Department A. The January 1 work in process inventory in Department A contained $20,000 in materials cost and $11,000 in conversion cost. During January, materials costs were $2.00 per equivalent unit and conversion costs were $2.50 per equivalent unit. All of the units in the beginning work in process inventory were completed and transferred out during the month. What was the total cost attached to these units when they were transferred to the next department?
A) $35,000
B) $31,000
C) $46,000
D) $337,500
Process Costing
A costing method used for homogeneous products, allocating costs based on the processes or departments through which the products pass.
Conversion Costs
Costs incurred during the transformation of raw materials into finished goods, including both direct labor costs and manufacturing overhead.
Equivalent Unit
A computation used in process costing that converts partially completed units of production into a number of fully completed units.
- Compute the entire cost allotted to units that have been finalized and dispersed out of a department.
- Understand how materials costs are accounted for in a process costing system.
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Learning Objectives
- Compute the entire cost allotted to units that have been finalized and dispersed out of a department.
- Understand how materials costs are accounted for in a process costing system.
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