Question

EA2.

LO 5.1A company started a new product, and in the first month started 100,000 units. The ending work in process inventory was 20,000 units that were 100% complete with materials and 75% complete with conversion costs. There were 100,000 units to account for, and the equivalent units for materials was $6 per unit while the equivalent units for conversion was $8 per unit. What is the value of the inventory transferred out, using the weighted-average inventory method?

Answer 1

$1,120,000.

Step-by-step explanation:

The value of inventory transferred out can be determine by multiplying the cost per unit incurred in the period with total unit transferrd out.

Unit transferred out = 100,000 -20,000 =80,000

Cost per unit = Material cost + conversion costs

= 6+8 = $14

Cost of inventory transferred out = 80,000 * 14 = $1,120,000

(For Material

Unit put in process = 100,000

Total Material 100,000 * 6 = $600,000

Conversion costs

Unit put in process = 100,000

In complete units = (5,000) (20,000*25%)

equivalent units = 95,000)