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11 March, 15:08

ameron Company uses a process cost system and the weighted average method to account for its production. The following information was available for August: units Costs Work in Process, August 1 100 $ 2,990 Work in Process, August 31 200 (A) During the month, 800 units were started into production, and $5,000 in costs were incurred. Ending inventory was 50% complete. The cost of the units transferred out would be: (Do not round your intermediate calculations.)

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  1. 11 March, 15:37
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    Cost of Units Transferred Out: $7,548

    Explanation:

    Cost Units

    Beginning Work in Process (WIP) : $2,990 1,100

    Production Started during August 800

    Production Completed in August 1,700 *

    Cost added to during August $5,000

    Ending WIP August: 200 (50%)

    *Completed: Beginning WIP Units + Started Units - Ending WIP Units = 1,100 + 800 - 200 = 1,700

    Costs of the Units: Cost of beginning WIP Units + Cost Added during the Period

    Cost of the Units: $2,990 + $5,000 = $7,990

    Equivalent Units of Production (EUP) : Completed Units + Ending WIP Units

    EUP: 1,700 Units + 200 Units x 50% = 1,800 Units

    Cost per Equivalent Unit: Cost of Units / EUP

    Cost per EUP: $7,990 / 1,800 = $4.44

    Cost of Units Transferred Out: Cost per EUP x Units Transferred Out

    Cost per Units Transferred Out: $4.44 x 1,700 = $7,548
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