Question

Refresh produces soft drinks and sodas. Production of 104,410 liters was started in February, 88,060 liters were completed. Material costs were $38,580 for the month while conversion costs were $18,180. There was no beginning work-in-process; the ending work-in-process was 40% complete. What is the cost of the product that was completed and transferred to finished goods

Answer 1

Answer:

$3,924

Explanation:

Refresh produces soft drinks and sodas.

Equivalent production

= 88,060 + [40% × (104,410 - 88,060)]

=88,060 +(40%×$ 16,350)

=$88,060 +$6,540

=$94,600 units

Cost per unit = ($38,580 + 18,180)/94,600

=$56,760/$94,600= $0.6

Costs in ending WIP = [40% × (104,410 - 88,060)] × $0.6

=(40%×$16,350)×0.6

=$6,540×$0.6

=$3,924

Therefore the cost of the product that was completed and transferred to finished goods was $3,924

Answer 2

Answer:

$52,836

Explanation:

This can be determined as follows:

Equivalent liters produced = Liters completed + [40% × (Liters started - Liters completed)]

Therefore we have:

Equivalent liters produced = 88,060 + [40% × (104,410 - 88,060)] = 94,600 liters

Cost per liters = (Material cost + Conversion cost) ÷ Equivalent liters produced

Therefore, we have:

Cost per liter = ($38,580 + $18,180) ÷ 94,600 = $0.60

Costs transferred = Liters completed × cost per liter

Therefore, we have:

Costs transferred = 88,060 × $0.60 = $52,836

Therefore, the cost of the product that was completed and transferred to finished goods is $52,836.