Question

ABC Inc. calculates cost for an equivalent unit of production using the weighted-average method.

Data for July:
Work-in-process inventory, July 1 (37,000 units):
Direct materials (98% completed)	$	122,500
Conversion (52% completed)		76,950
Balance in work in process inventory, July 1	$	199,450
Units started during July		91,000
Units completed and transferred		103,800
Work-in-process inventory, July 31:
Direct materials (98% completed)		24,200
Conversion (52% completed)
Cost incurred during July:
Direct materials	$	181,000
Conversion costs		289,000

The cost of goods completed and transferred out under the weighted-average method is calculated to be--------------:

• $583,610.

• $572,976.

• $607,200.

• $96,344.

• $584,630.

Answer 1

Solution:

Equivalent units of production (EUP) - Weighted Average method
	Units	%Material	EUP-Material	% Conversion	EUP- Conversion
Units transferred out	103800	100%	103800	100%	103800
units of Ending work in process	24200	98%	23716	52%	12584
Equivalent units of production			127516		116384

Cost per EUP			Material		Conversion
Cost of Beginning Work in process			$1,22,500		$76,950
Costs incurred this period			$1,81,000		$2,89,000
Total Costs		Costs	$3,03,500	Costs	$3,65,950
/Equivalent units of Production		EUP	127516	EUP	116384
Cost per Equivalent unit of Production			$2.38		$3.14

Cost of Units Transferred out	EUP	Cost per EUP	Total Cost
Direct Material	103800	$2.38	$2,47,044
Conversion	103800	$3.14	$3,25,932
Total Cost transferred out			$5,72,976

Hence second option $572,976 is correct.