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Managerial Accounting: The Corners...

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

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Use the following information for Multiple-Choice Questions 6-7 through 6-9:

The mixing department incurred $46,000 of manufacturing costs during the month of September. The department transferred out 2,300 units and had 500 units in EWIP, 40% complete. There was no BWIP.

6-8 The cost of goods transferred out is

  1. a. $42,320.
  2. b. $46,000.
  3. c. $37,789.
  4. d. $460,000.
  5. e. None of these.

To determine

Identify cost of goods transferred out of mixing department.

Explanation

Equivalent Units of Production:

The total units of finished goods along with those goods that are not fully complete are known as equivalent units of production. In other words, equivalent units of production measures both completed and nearly completed units.

a.

Use the following formula to calculate cost of goods transferred out:

Cost of goods transferred out=Unit cost×Units transferred=$18.40×2,300 units=$42,320

The cost of goods transferred out is $42,320. Therefore, option a. is correct

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