Question

Stefan Ceramics is in the business of selling ceramic vases. It has two departments - molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 720 kgs of tungsten carbide at $280 per kg. It started manufacture of 4,200 vases and completed and transferred 3,400 vases during the month. It has nd of the month. It incurred direct labor charges of $1.000 and other manufacturing costs of $1,500, which included electricity costs of $1,200. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 45% complete in respect of conversion costs. What is the cost of tungsten carbide that will be assigned to vases finished and transferred to the finishing department for the month of July? O A. $133,280 O B. $166,900 C. $201,600 OD. $163,200

Answer 1

Equivalent unit of conversion = 3400+(800*45%) = 3760

Cost per equivalent unit of conversion = (1000+1500)/3760 = 0.66

Cost per equivalent unit of material = 201600/4200 = 48

Cost of Tungsten Carbride in Unit transferred out = 3400*48 = 163200

So answer is d) $163200