Question

Heavy Steel processes a single type of steel. For the current period the following information is given:

Units Material Costs Conversion Costs
Beginning inventory 3,000 4,5005,400
Started during the current period 20,000 32,000 78,200
Ending inventory 2,500
All materials are added at the beginning of the production process. The beginning inventory was 40

Heavy Steel uses the weighted-average costing method.

What is the total cost assigned to the units completed and transferred this period?

Answer 1

The total cost assigned to the units completed and transferred this period is $4,098,250.

Step-by-step explanation:

To determine the total cost assigned to the units completed and transferred this period using the weighted-average costing method, we need to calculate the cost per equivalent unit for both material costs and conversion costs. The formula for calculating the cost per equivalent unit is:

Cost per equivalent unit = (Cost of beginning inventory + Cost added during the current period) / (Units in beginning inventory + Units started during the current period)

For material costs:

Cost per equivalent unit = (4,500 + (20,000 - 2,500)) / (3,000 + 20,000) = $234.38

For conversion costs:

Cost per equivalent unit = (5,400 + (32,000 - 0)) / (3,000 + 20,000) = $1.95

To calculate the total cost assigned to units completed and transferred, we multiply the cost per equivalent unit by the number of units completed and transferred:

Total cost assigned = (Units completed and transferred) * (Cost per equivalent unit)

Given that the ending inventory is 2,500 units, which means 20,000 - 2,500 = 17,500 units were completed and transferred:

Total cost assigned = 17,500 * $234.38 = $4,098,250