PC Refinery uses a FIFO process costing system. For a particular period, its ope

Question

PC Refinery uses a FIFO process costing system. For a particular period, its opening inventory consisted of 100 items (60 per cent complete as to conversion costs) whose costs were $1,600 made up of material $300 and conversion cost $1,300. During the month, 1,000 items were started and 950 were completed. Ending inventory of WIP was one-third complete. There was no spoilage. Costs placed in process during the month were materials $1,785 and conversion costs $13,865. Materials are added at the halfway point. What is the amount of cost that would be allocated to goods completed in the period?

Explanation / Answer

Equivalent Units Whole Units Direct Materials Conversion Inventory in process, beginning 100 0 40 Started and completed in month 850 850 850 Transferred and completed in Month 950 850 890 Inventory in process, ending 150 0 50 Total units to be assigned costs 1100 850 940 Cost Information Costs per equivalent unit: Direct Materials Conversion Costs placed in process during the month 1785 13865 Total equivalent units 850 940 Cost per equivalent unit 2.1 14.75 Costs charged to production: Direct Materials Conversion Total Inventory in process, beginning balance 1600 To complete inventory in process, Beginning 590 590 (40*14.75) Cost of completed beginning work in process 2190 (1600+590) Started and completed in month 1785 12538 14323 (850*2.1)+(850*14.75) Cost of goods completed in the period 16513 (2190+14323) Option B is correct

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