Question

The Assembly Department uses a process cost accounting system and a weighted-average cost flow assumption. The department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process. During July, $190,000 of materials costs and $137,100 in conversion costs were charged to the department. The beginning work in process inventory was $93,000 on July 1, comprised of $80,000 of materials costs and $13,000 of conversion costs. Other data for the month of July are as follows: Beginning work in process inventory, 7/1 25,000 units (40% complete) Units completed and transferred out 70,000 units Ending work in process inventory, 7/31 30,000 units (30% complete) What is the total cost assigned to the 70,000 units that were transferred out of the process in July?

Answer 1

Answer:

The cost of the transferred-out is $221,200

Explanation:

Materials cost 190,000

Conversion Cost 137,100

Complete and transferred-out 70,000

WIP       30,000 at 100% materials 30% conversion cost

Materials

Complete and transferred-out  + complete portion of ending WIP

70,000 + 30,000 x 100% = 100,000

Cost per unit (190,000+80,000)/100,000 = 2.7

Conversion cost

Complete and transferred-out  + complete portion of ending WIP

70,000 + 30,000 x 30% = 79,000

Cost per unit (137,100+13,000)/79,000 = 1.89

Total cost per equivalent unit  Materials + CC

2.7+1.89 = 3.16

Transferred-out

70,000 x 3.16 = 221,200