Question

Honda Motors uses the weighted-average method in its process costing system. The beginning work in process inventory in a particular department consisted of 11,000 units, 100% complete with respect to materials cost and 30% complete with respect to conversion costs. The total cost in the beginning work in process inventory was $22,400. A total of 45,000 units were transferred out of the department during the month. The costs per equivalent unit were computed to be $1.20 for materials and $3.40 for conversion costs. The total cost of the units completed and transferred out of the department was:

A. $182,580
B. $184,600
C. $207,000
D. $204,980

Answer 1

The total cost for the units completed and transferred out using the weighted-average method is calculated by adding the beginning inventory cost to the product of units transferred out and their respective cost per equivalent unit for materials and conversion costs, plus any additional conversion costs for the beginning work in process. The total comes to $240,620, which does not match any of the provided options.

Step-by-step explanation:

To calculate the total cost of the units completed and transferred out of the department using the weighted-average method in process costing, we need to take into account the cost of the beginning work in process inventory plus the cost incurred during the period for the units completed and transferred out.

Firstly, let's summarize the given information:

• Beginning work in process inventory: 11,000 units
• Material cost is 100% complete; Conversion cost is 30% complete
• Total cost in beginning work in process: $22,400
• Total units transferred out: 45,000 units
• Cost per equivalent unit: $1.20 for materials, $3.40 for conversion costs

Next, calculate the equivalent units for materials and conversion costs in the beginning inventory:

• Materials: 11,000 units (100%) = 11,000 equivalent units
• Conversion: 11,000 units (30%) = 3,300 equivalent units

Since the materials are already 100% complete, we don't add additional materials cost for the beginning inventory. We only add conversion costs, which are 70% incomplete.

The costs for equivalent units of production for units transferred out:

• Total material cost: 45,000 units × $1.20/unit
• Total conversion cost: 45,000 units × $3.40/unit

Add the conversion costs for the beginning work in process:

• Beginning conversion cost (remaining 70%): 3,300 equivalent units × $3.40/unit

Final computation for total costs:

1. Total material cost for units transferred out = 45,000 × $1.20
2. Total conversion cost for units transferred out = 45,000 × $3.40
3. Additional conversion cost for beginning work in process = 3,300 × $3.40
4. Total cost = Beginning work in process cost + (1) + (2) + (3)

After performing the calculations:

• Total material cost = 45,000 × $1.20 = $54,000
• Total conversion cost = 45,000 × $3.40 = $153,000
• Additional conversion cost = 3,300 × $3.40 = $11,220
• Total cost = $22,400 (beginning inventory cost) + $54,000 + $153,000 + $11,220 = $240,620

The total cost of units completed and transferred out is not one of the options provided (A. $182,580 B. $184,600 C. $207,000 D. $204,980), indicating there may be an error in the provided choices or in the information given.