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, 40,000 units of product were started in Department 1 and 32,000 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, Department 1 incurred $48,000 in direct materials costs and $211,600 in conversion costs. The ending inventory in Department 1 was 60% complete with respect to conversion costs. What was the cost assigned to units completed and transferred out of Department 1 in January?

1. $222,400

2. $48,000

3. $211,600

4. 37,200