Question

The Lakeside Company uses a welghted-average process costing system. The following data are available: -0- 20,000 16,000 Beginning inventory Units started in production Units finished during the period Units in process at the end of the period (complete as to materials, % complete as to labor and overhead) Cost of materials used Labor and overhead costs 4,000 $35,200 $37,400 Total cost of the 4,000 units of the ending Inventory: Multiple Choice $9,240. $14,520. $8.910. $15,840.

Answer 1

Option A ( $ 9,240 ) is the Correct Answer.

Notes

Using Weighted Average Method

Particulars	Units	% Materials	EUP Materials	% Conversion	EUP Conversion
Units Transferred Out during the Year	16,000	100%	16,000	100%	16,000
Ending Inventory	4,000	100%	4,000	25%	1,000
Total	20,000		20,000		17,000

EUP Stands for Equivalent Units of Production

EUP Materials = Unit * % Materials

EUP Conversion = Units * % Conversion

Completed as to Conversion = 1/4 * 100% = 25%

Conversion here means Labour and Overhead Costs.

Equivalent Cost per Unit of Materials = 35,200 / 20,000 = $ 1.76 per Unit

For Units in Ending Inventory = 4,000 Units * $ 1.76 per Unit = $ 7,040

Equivalent Units for Conversion Costs = 37,400 / 17,000 = $ 2.2 Per Unit

Cost for Units in Ending Inventory = 1,000 Equivalent Units for Conversion * $ 2.2 per Unit = $ 2,200

Total Costs of Ending Inventory = 7,040 + 2,200

Total Cost of Ending Inventory = $ 9,240