creer company uses the fifo method in its process costing system. department a had 20,000 units in process…

creer company uses the fifo method in its process costing system. department a had 20,000 units in process at the beginning of january, which were 40% complete with respect to conversion costs. all materials are added at the beginning of the process in department a. the january 1 work - in - process inventory in department a contained $10,000 in materials cost and $11,600 in conversion cost. during january, materials costs were $0.50 per equivalent unit and conversion costs were $1.50 per equivalent unit. all of the units in the beginning work - in - process inventory were completed and transferred out during the month. what was the total cost attached to these units when they were transferred to the next department? $37,600 $39,600 $33,600 $45,600

creer company uses the fifo method in its process costing system. department a had 20,000 units in process at the beginning of january, which were 40% complete with respect to conversion costs. all materials are added at the beginning of the process in department a. the january 1 work - in - process inventory in department a contained $10,000 in materials cost and $11,600 in conversion cost. during january, materials costs were $0.50 per equivalent unit and conversion costs were $1.50 per equivalent unit. all of the units in the beginning work - in - process inventory were completed and transferred out during the month. what was the total cost attached to these units when they were transferred to the next department? $37,600 $39,600 $33,600 $45,600

Answer

Explanation:

Step1: Calculate conversion cost added in January

Since the beginning work - in - process was 40% complete for conversion costs, the percentage of conversion costs added in January is (1 - 40%=60%). There are 20,000 units. The conversion cost per equivalent unit is ($1.50). The conversion cost added in January is (20000\times0.6\times1.50=$18000)

Step2: Calculate total cost

The beginning materials cost is ($10000), the beginning conversion cost is ($11600), and the conversion cost added in January is ($18000) The total cost is (10000 + 11600+18000=$39600)

Answer:

($39,600) (the second option)