Question

Chae Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 600 units. The costs and percentage completion of these units in beginning inventory were:

Answer 1

Answer:

If costs and percentage completion of these units in beginning inventory were:

Cost Percent Complete

Materials costs $7,900 60%

Conversion costs $6,900 30%

A total of 8,100 units were started and 7,600 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

Materials costs $137,900

Conversion costs $323,900

The ending inventory was 80% complete with respect to materials and 75% complete with respect to conversion costs.

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

The cost per equivalent unit for materials for the month in the first processing department is closest to $17.03

Explanation:

Weighted-average method is used to make an inventory valuation, taking average values ​​for both the merchandise in stock and for the costs of merchandise sold.

But in this case, since you have unfinished units, you must take the equivalent to calculate the unit cost.

Materials:

Units completed: 7,600

Units in process: 1,200 * 80% = 960

Equivalent production units: 7,600 +, 960 = 8560

Cost at start: 7,900

Added costs in the period: 137,900

Total cost: 7900 + 137,900 = 145,800

So: 145,800 / 8,560 = 17.03 is the equivalent unit cost per product