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29 September, 10:47

The Assembly Department uses a process cost accounting system and a weighted-average cost flow assumption. The department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process. During July, $190,000 of materials costs and $137,100 in conversion costs were charged to the department. The beginning work in process inventory was $93,000 on July 1, comprised of $80,000 of materials costs and $13,000 of conversion costs. Other data for the month of July are as follows: Beginning work in process inventory, 7/1 25,000 units (40% complete) Units completed and transferred out 70,000 units Ending work in process inventory, 7/31 30,000 units (30% complete) What is the total cost assigned to the 70,000 units that were transferred out of the process in July?

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Answers (1)
  1. 29 September, 10:50
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    The cost of the transferred-out is $221,200

    Explanation:

    Materials cost 190,000

    Conversion Cost 137,100

    Complete and transferred-out 70,000

    WIP 30,000 at 100% materials 30% conversion cost

    Materials

    Complete and transferred-out + complete portion of ending WIP

    70,000 + 30,000 x 100% = 100,000

    Cost per unit (190,000+80,000) / 100,000 = 2.7

    Conversion cost

    Complete and transferred-out + complete portion of ending WIP

    70,000 + 30,000 x 30% = 79,000

    Cost per unit (137,100+13,000) / 79,000 = 1.89

    Total cost per equivalent unit Materials + CC

    2.7+1.89 = 3.16

    Transferred-out

    70,000 x 3.16 = 221,200
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