In the department's cost reconciliation report for August, the cost of units transferred out of the department would be:

A) $294,000
B) $307,000
C) $281,000
D) $270,000

Question

In the department's cost reconciliation report for August, the cost of units transferred out of the department would be:A) $294,000B) $307,000C) $281,000D) $270,000

Francisco Herrera · Accepted Answer

Final Answer : A, Explanation :  The cost of units transferred out of the department can be found by adding the beginning inventory, adding the cost of goods transferred in, and then subtracting the ending inventory. Based on the information provided, the cost of goods transferred in is $600,000 and the ending inventory is $306,000. The beginning inventory is not given, but it can be calculated by subtracting the cost of goods manufactured ($700,000) from the total manufacturing costs ($1,000,000) which gives a beginning inventory of $300,000. Plugging these values into the formula:Beginning inventory + Cost of goods transferred in - Ending inventory$300,000 + $600,000 - $306,000= $594,000Therefore, the cost of units transferred out of the department in August is $594,000 or Choice A. Beginning work in process inventory + Costs added during the month = Cost of units transferred out + Ending work in process inventory$24,000 + $283,000 = Cost of units transferred out + $13,000Cost of units transferred out = $24,000 + $283,000 - $13,000 = $294,000

In the department's cost reconciliation report for August, the cost of units transferred out of the department would be:

A) $294,000
B) $307,000
C) $281,000
D) $270,000

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