Answer:
$51,000
Explanation:
Equivalent production = 85,000 + [40% × (100,000 - 85,000)] = 91,000 units. Given.
Total Production = 100,00 litres
Completed = 85,000
Material Cost = $38,220
Conversion Cost = 16,380
Beginning work process = 0
End work process = 40%
Uncompleted Production = 100,000 - 85,000 = 15,000
Total Cost = 38,220 + 16,380 = 54,600
First we Calculate the Total Units of Production
This is given by:
Total Units of Production = Completed Production + [40% × (Uncompleted Production)] =
Total Units of Production = 85,000 + [40% × (15,000)]
Total Units of Production = 91,000 units.
Calculating Cost per unit = Total Cost/Total Units
Cost per unit = ($38,220 + $16,380)/91,000
Cost Per Unit = $0.60;
Cost Transferred = Materials Cost * Cost Per Unit
Costs Transferred = 85,000 × $0.60 = $51,000
