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 non deductible material defects. Spoiled units generally constitute 4% of the good units. Data provided for February 2019 are as follows: WIP, beginning inventory 2/1/2019 50,000 units Direct materials (100% complete) Conversion costs (50% complete) Started during February 164,000 units Completed and transferred out 162,000 units WIP, ending inventory 2/29/2019 30,000 units Direct materials (100% complete) Conversion costs (25% complete) Costs: WIP, beginning inventory: Direct materials $ 300,000 Conversion costs 88,000 Direct materials added 419,832 Conversion costs added 219,786 What are the total costs of all the units that were initially in the beginning work-in-process inventory and were subsequently shipped

Total Costs Transferred Out     906422.4

Difference may be due to rounding .

Explanation:

Samantha's Office Supplies

Equivalent units

Particulars       Units            % of Completion                Equivalent Units

                                          Materials Conversion     Materials Conversion

Completed and

transferred out        162,000  (100% ) (100% )     162,000 162,000

WIP,

Normal Spoilage       6,480     (100% ) (100% )       6,480     6,480

Ending inventory   30,000  (100% )  (25% )           30,000, 7,500

Accounted For        198,480                               198,480       175,980                                                                    

Costs:                    Total            Direct materials        Conversion costs

WIP, beginning

inventory:             388,000          $ 300,000                      88,000

Costs Added          639618             419,832                           219,786

Total Costs

To Account for    1027618             719,832                             307786

Divided By

Equivalent Units                               198,480                            175,980  

Equivalent Unit Costs   5.38                 3.63                                  1.75      

Assignment of Costs

Transferred out ( 5.38* 162,000)=  871560

Normal Spoilage (5.38* 6480)=   34862.4

Total Costs Transferred Out     906422.4

Difference may be due to rounding .

answer; i believe that the correct answer is (d); the business benefits because owners can share responsibilities;

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