Question

Assume a company uses the weight-average method in its process costing. Its Work in Process T-account for the Refining Department for August is:

  

Work in Process: Refining Department

August 1 balance 62,000Completed and transferred to Finished Goods?

Materials 310,000  

Direct labor 72,000  

Overhead 181,000  

August 31 balance?  

The August 1 work in process inventory consisted of 6,000 units with $35,000 in materials cost and $27,000 in conversion cost. The August 1 work in process inventory was 100% complete with respect to materials and 40% complete with respect to conversion. During August 48,000 units were started into production. The August 31 work in process inventory consisted of 8,000 units that were 100% with respect to materials and 60% complete with respect to conversion.

The materials cost included in the amount transferred from the Refining Department to Finished Goods is closest to:

Answer 1

Units completed and transferred out:

= 6,000 + 48,000 - 8,000

= 46,000

Equivalent units:

Material:

= 46,000 + (8,000 X 100%)

= 54,000

Cost per equivalent unit:

= ($35,000 + $310,000) / 54,000

= $6.38

Material cost include in units transferred out:

= 46,000 X $6.38

= $293,889

Select the option which is closest to $293,889