Question

Under the weighted-average method, the cost of units transferred out of a department is computed as follows for a cost category:

A. Costs added during the period + Cost of beginning work in process inventory

B. Units transferred to the next department × Cost per equivalent unit

C. Units in ending work in process inventory × Cost per equivalent unit

D. Cost of ending work in process inventory − Cost of beginning work in process inventory

Answer 1

B. Units transferred to the next department × Cost per equivalent unit

Step-by-step explanation:

Cost per equivalent unit refers to the cost of each completed unit possible.

As there is not only the units which are complete, but newly introduced and those in work in progress, and therefore, the cost of each equivalent unit is calculated so that it computes the cost for each unit.

Accordingly, all the units which are completed and transferred to another department are complete and the equivalent cost of completion of each unit shall be allocated to those units.

Therefore, correct option is:

Option B.