Question

A company completes 21,000 units this month and has ending goods in process inventory of 3,000 units which are estimated to be 40% complete. Direct materials cost per EUP is $5.00 and Conversion cost per EUP is $1.50. The cost transferred to Finished Goods Inventory is $____________

Answer 1

Answer:

The correct answer is $136,500.

Explanation:

According to the scenario, the given data are as follows:

Complete units = 21,000 units

Direct material cost per EUP = $5.00

So, direct material cost = 21,000 × $5 = $105,000

Conversion cost per EUP = $1.50

So, conversion cost = 21,000 × $1.50 = $31,500

So, we can calculate the cost transferred to finished goods by using the following formula:

The cost transferred to finished goods = Direct material Cost + Conversion Cost

= $105,000 + $31,500

= $136,500

Hence, the cost transferred to finished goods is $136,500.