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A company which operates a process costing system had work-in-progress at the start of last month of 300 units (valued at $1,710) which were 60% complete in respect of all costs. Last month a total of 2,000 units were completed and transferred to the finished goods warehouse. The cost per equivalent unit for costs arising last month was $10. The company uses the FIFO method of cost allocation.
What was the total value of the 2,000 units transferred to the finished goods warehouse last month?
A $19,910 B $20,000 C $20,510 D $21,7102,000 units were completed, but 300 of them were already in profess at the the start of the month. So 1700 were completed in full this month, and so they will be valued at $10 each – a total of 17000.
The 300 in progress had already had 1710 spent on them. This month they had 40% work done to finish them. So the cost of finishing them (at this months prices) is 300 x 40% x $10 = 1200. This means that the total value when they were completed was 1710 + 1200 = 2910.
So the total value of all 2000 completed units is 17,000 + 2,910 = 19,910.
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