Refresh produces soft drinks and sodas. Production of 100,000 liters was started in February, 85,000 liters were completed. Material costs were $38,220 for the month while conversion costs were $16,380. There was no beginning work-in-process; the ending work-in-process was 40% complete. What is the cost of the product that was completed and transferred to finished goods?

Cost transfered to finished goods = $51,000

Explanation:

In this production process the target production was 100,000 litres. In February 85,000 litres was completed.

So the balance uncompleted is 100,000 - 85,000 = 15,000 litres

Of this 15,000 40% was eventually completed. That is 0.4 * 15,000 = 6,000 litres

Therefore

Equivalent production = 85,000 + 6,000

Equivalent production = 91,000 litres

Cost per litre = (Material cost + Conversion cost) / Number of litres

Cost per litre = (38,220+16,380) / 91,000

Cost per litre = 54,600/91,000 = $0.6

Cost transfered to finished goods = Cost per litre * Completed goods

Cost transfered to finished goods=0.6 * 85,000

Cost transfered to finished goods = $51,000