Question

ameron Company uses a process cost system and the weighted average method to account for its production. The following information was available for August: units Costs Work in Process, August 1 100 $ 2,990 Work in Process, August 31 200 (A) During the month, 800 units were started into production, and $5,000 in costs were incurred. Ending inventory was 50% complete. The cost of the units transferred out would be: (Do not round your intermediate calculations.)

Answer 1

Answer:

Cost of Units Transferred Out: $7,548

Explanation:

                                                                      Cost                       Units                                      

Beginning Work in Process (WIP):              $2,990                    1,100

Production Started during August                                               800

Production Completed in August                                                1,700 *

Cost added to during August                     $5,000    

Ending WIP August:                                                                      200 (50%)

*Completed: Beginning WIP Units  + Started Units  - Ending WIP Units = 1,100 + 800 - 200 = 1,700

Costs of the Units: Cost of beginning WIP Units + Cost Added during the Period

Cost of the Units: $2,990 + $5,000 = $7,990

Equivalent Units of Production (EUP): Completed Units + Ending WIP Units

EUP: 1,700 Units + 200 Units x 50% = 1,800 Units

Cost per Equivalent Unit: Cost of Units / EUP

Cost per EUP: $7,990 / 1,800 = $4.44

Cost of Units Transferred Out: Cost per EUP x Units Transferred Out

Cost per Units Transferred Out:  $4.44 x 1,700 = $7,548