A department completed and transferred to finished goods 75,000 units. The cost per EUP for direct materials is $8.00 and the cost per EUP for conversion cost is $6.00. The costs transferred to Finished Goods Inventory is $.

Question

Esmeralda Molina

Business

12 September, 11:08

A department completed and transferred to finished goods 75,000 units. The cost per EUP for direct materials is $8.00 and the cost per EUP for conversion cost is $6.00. The costs transferred to Finished Goods Inventory is $.

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Jackson Fritz · Answer 1

The cost transferred to Finished Goods Inventory is $1,050,000/-

Explanation:

To compute the cost transferred to finished goods inventory is equal to the total number of units completed and transferred to finished goods multiplied with cost per equivalent unit of labour, overhead (conversion cost) and material cost.

In this case the cost per equivalent unit for production (EUP) for direct material is $8/-. Similarly the overhead cost or conversion cost per equivalent unit for production (EUP) is given as $6/-.

Adding both the material and conversion cost per EUP i. e $8+$6 = $14/-. To arrive at the costs transferred to finished goods, all the cost incurred have to be considered i. e material and overheads.

Therefore the cost transferred to finished goods inventory is 75,000 units completed and transferred to FG, multiplied by total cost of EUP i. e $14/-.

Cost transfreed to FG inventory = 75,000 * $14 = $1,050,000/-