   Chapter 6, Problem 17MCQ ### Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

#### Solutions

Chapter
Section ### Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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# For August, Lanny Company had 25,000 units in BWIP, 40% complete, with costs equal to $36,000. During August, the cost incurred was$450,000. Using the FIFO method, Lanny had 125,000 equivalent units for August. There were 100,000 units transferred out during the month. The cost of goods transferred out is a. $500,000. b.$360,000. c. $450,000. d.$400,000. e. $50,000. To determine Identify cost of goods transferred out, using FIFO method. Explanation First-in first out method: A method which separates the beginning inventory units from units produced during a period is known as FIFO method. In FIFO method, only cost incurred during a period is considered to calculate unit cost. b. Use the following formula to calculate cost of goods transferred out: Cost of goods transferred out=Unit cost×Unit transferred out=$3.60×100,000 units=$360,000 The cost of goods transferred out is$360,000. Therefore, option b. is correct

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