Question

In the weighted average method of process costing, how do you calculate the ending inventory cost?

1) Compute the equivalent units, compute the unit cost of production, and apply the unit cost to the equivalent units in the ending inventory
2) Compute the equivalent units and apply the unit cost to the equivalent units in the ending inventory
3) Compute the equivalent units, compute the unit cost of production, and apply the unit cost to the equivalent units in the beginning inventory
4) Compute the equivalent units and apply the unit cost to the equivalent units in the beginning inventory

Answer 1

To calculate the ending inventory cost in the weighted average method of process costing, compute the equivalent units, determine the unit cost of production, and apply this cost to the equivalent units in the ending inventory.

Step-by-step explanation:

In the weighted average method of process costing, to calculate the ending inventory cost, one should follow these steps:

1. Compute the equivalent units.
2. Compute the unit cost of production, which involves dividing the total costs by the total units produced.
3. Apply the unit cost to the equivalent units in the ending inventory.

This method ensures that the costs of the beginning inventory and the costs incurred during the current period are combined and spread out evenly across all units. Therefore, the correct approach is to compute the equivalent units, compute the unit cost of production, and apply the unit cost to the equivalent units in the ending inventory. This will give the value of goods that are partially completed at the end of the period.