Reference no: EM132806710

Question - Azalea's Totes makes fashion handbags out of leather. The manufacturing takes place in two departments: the cutting department and the sewing department. The cutting department cuts the leather into pieces, bundles the pieces for each handbag into a unit and sends the bundles to the sewing department. Then the sewing department sews the pieces into the finished products with zippers, buckles, and decorative pieces added.

Azalea's uses a process costing system to determine its product costs. All materials for each department are added at the beginning of the process, and conversion costs are added evenly throughout.

The following details are available for May production in the sewing department:

Beginning work-in-process (WIP) inventory

Number of tote bundles 300

Direct materials 3,825

Conversion cost 2,250

Transferred-in cost $7,500

Per cent completion 50%

May activity

Number of tote bundless transferred from cutting 3,500

Number of tote bundles completed 3,400

Per cent completion of ending inventory 65%

Transferred-in cost, direct materials cost, and conversion cost per equivalent unit have not changed from the previous period. The company uses the weighted average method.

What is the cost of the handbags transferred out of the sewing department for the month of May?

a) $68,850

b) $94,350

c) $153,850

d) $179,350