Castellanos Foods is a Greek producer of world-renownedspanakopita. The company uses a first-in, first-out (FIFO) processcosting system to cost its production of spanakopita in traysthrough three departments: filo pastry preparation, fillingpreparation and baking. Inspection takes place just before the last20% of the filling is added to the final product in the fillingpreparation department. The company cost accountant has estimatedthat this is at 60% incurrence of conversion costs. The remainingdirect ingredients are added to all trays that pass inspection.Normal spoilage is 1% of good units that pass inspection in theperiod.
The following details pertain to the month of December for thefilling preparation department (in units):
Beginning work-in-process inventory (trays) 37,500
Trays transferred in from filo pastry preparation 150,000
Trays transferred out to baking 126,000
Ending work-in-process inventory (trays) 60,000
Costs Transferred Direct IngredientsConversion
Beginning inventory $174,375 $26,250 $28,275
Costs added $705,000 $89,775 $151,830
Percentage completion Direct Ingredients Conversion
Beginning inventory 100% 65%
Ending Inventory 50% 40%
Note: Read the question carefully with respect to when theinspection for spoilage takes place.
4. What is the total value of the product transferred from thefilling preparation department to baking in December? (Round finalanswer to the nearest dollar.)
a) $333,300
b) $760,513
c) $838,503
d) $984,805
