fnMaterials costs of 1260000 and conversion costs of 1344000

fnMaterials costs of $1260000 and conversion costs of $1344000 were charged to a processing department in the month of September. All materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 21000 units were started into production in September, and there were 7000 units in ending work in process that were 40% complete at the end of September.

What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the department in September?

Solution

Unit transferred out = 21000-7000 = 14000 units

Equivalent unit of material = 21000 units

Equivalent unit of conversion = 14000+(7000*40%) = 16800 Unit

Cost per equivalent unit of material = 1260000/21000 = 60

Cost per equivalent unit of conversion = 1344000/16800 = 80

Cost of unit completed and transferred out = (60+80)*14000 = $1960000

So answer is a) $1960000