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Business, 20.04.2020 21:26 yuvallevy14

Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are included at the inception of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Inspection takes place as units are placed into production. After inspection, some units are spoiled due to nondetectible material defects. Normally spoiled units generally constitute 3% of the good units transferred out. Data provided for February 2015 are as follows:

WIP, beginning inventory 2/1/2015 51,000 units
Direct materials (100% complete)
Conversion costs (50% complete)

Started during February 170,000 units
Completed and transferred out 180,000 units

WIP, ending inventory 2/28/2015 26,000 units
Direct materials (100% complete)
Conversion costs (25% complete)

Costs:
WIP, beginning inventory:

Direct materials $280,000
Conversion costs 80,000
Direct materials added 408,000
Conversion costs added 264,000

What are the direct material and conversion costs of all the units that were initially in the beginning work-in-process inventory and were subsequently shipped?

a. $35,363
b. $360,400
c. $395,763
d. $195,016

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Answers: 1

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