Question

Sumter Corporation uses the weighted-average method in its process costing system. The following data pertain to operations in the first processing department for a recent month:

Work in process, beginning:
Units in process 6,000
Percent complete with respect to materials 60%
Percent complete with respect to conversion 20%
Costs in the beginning inventory:
Materials cost $ 78,200
Conversion cost $ 3,600
Units started during the month ?
Units completed and transferred out during the month 70,000
Costs added to production during the month:
Materials cost $ 286,600
Conversion cost $ 216,000
Work in process, ending:
Units in process 8,000
Percent complete with respect to materials 75%
Percent complete with respect to conversion 25%
How much cost, in total, was assigned to the units transferred out to the next department during the month?

Multiple Choice
$549,500
$584,400
$502,600
$535,000

Answer 1

To answer this question, we need to use the weighted-average method to calculate the equivalent units of production and the cost per equivalent unit for both materials and conversion. Then, we can multiply the cost per equivalent unit by the number of units transferred out to get the total cost assigned to them.

First, we need to find the units started during the month. We can use the following formula:

units started = units completed + units in ending inventory - units in beginning inventory

Plugging in the given data, we get:

units started = 70,000 + 8,000 - 6,000

units started = 72,000

Next, we need to find the equivalent units of production for both materials and conversion. We can use the following formula:

equivalent units = units completed + (units in ending inventory * percent complete)

Plugging in the given data, we get:

equivalent units of materials = 70,000 + (8,000 * 75%)

equivalent units of materials = 76,000

equivalent units of conversion = 70,000 + (8,000 * 25%)

equivalent units of conversion = 72,000

Then, we need to find the cost per equivalent unit for both materials and conversion. We can use the following formula:

cost per equivalent unit = (cost in beginning inventory + cost added during the month) / equivalent units

Plugging in the given data, we get:

cost per equivalent unit of materials = ($78,200 + $286,600) / 76,000

cost per equivalent unit of materials = $4.80

cost per equivalent unit of conversion = ($3,600 + $216,000) / 72,000

cost per equivalent unit of conversion = $3.05

Finally, we need to find the total cost assigned to the units transferred out. We can use the following formula:

total cost = (units transferred out * cost per equivalent unit of materials) + (units transferred out * cost per equivalent unit of conversion)

Plugging in the given data, we get:

total cost = (70,000 * $4.80) + (70,000 * $3.05)

total cost = $336,000 + $213,500

total cost = $549,500

Therefore, the correct answer is $549,500.