Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about

Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about the July activities: ​ On July 1: Beginning inventories 850 units, 60% complete Direct materials cost $5,000 Conversion costs $4,000 During July: Number of units started 15,000 Direct materials added $155,000 Conversion costs added $83,520 On July 31: Ending inventories 1,600 units, 40% complete ​ ​ Using the FIFO method and rounding cost per unit to four decimal places, the cost of goods completed and transferred out during July was Group of answer choicesPenny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about the July activities: ​ On July 1: Beginning inventories 850 units, 60% complete Direct materials cost $5,000 Conversion costs $4,000 During July: Number of units started 15,000 Direct materials added $155,000 Conversion costs added $83,520 On July 31: Ending inventories 1,600 units, 40% complete ​ ​ Using the FIFO method and rounding cost per unit to four decimal places, the cost of goods completed and transferred out during July was Group of answer choicesa. 15,000b. 15,740c. 13,400d. 14,250

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d. $223,400 Explanation: beginning WIP 850 units  60% units started 15,000 units ending WP     1,600 units at 40% finished units: 850 + 15,000 – 1,600 = 14,250 started and completed during the period: 14,250 – 850 = 13,400 Direct materials: Equivalent units: 15,000 Cost per equivalent unit: 155,000 / 15,000 = 10.33 Transferred outs: 850 units                          $    5,000 13,400 at $ 10 each =       $ 134,000 Total                                   $ 139,000 Conversion Cost: Equivalent units: 13,400 + 1,600 x 40% + 850 x 40% = 14,380 Cost per equivalent unit: 83,520 / 14,380 = 5.8080 = 5.81 Cost per equivalent unti: 5.81 + 10.33 = 16.14 = 16 Transferred-out: beginning        $     9,000 13,400 x $16    $  214,400                             223,400

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