What is the cost assigned to units transferred to department

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Question - Company A uses process costing in its manufacturing operations. There are three processing departments: Department 1, Department 2, and Department 3. On January 1, 2012, Department 1 had a zero beginning balance in its work-in-process account. During January, 30,000 units of product were started in December 1 and 22,000 units of product were transferred to Department 2. In Department 1, all raw materials are added at the beginning of the production process and conversion costs are incurred evenly through the process.

During January, $232,500 of direct material costs and $167,000 of direct labor costs were incurred in Department 1. In addition, $85,000 of manufacturing overhead was applied to Department 1's operations during the month. Department 1'2 ending inventory was 40% complete with respect to conversion costs. Using this data, what is the cost assigned to units transferred to Department 2 during the period?

a. $408,250

b. $390,500

c. $532,000

d. $316,294

Reference no: EM132234511

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