Question

Hall Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:

Units in beginning work in process inventory 1,000
Materials costs $7,100
Conversion costs $6,400
Percent complete with respect to materials 65%
Percent complete with respect to conversion 30%
Units started into production during the month 13,600
Units transferred to the next department during the month 12,300
Materials costs added during the month $137,224
Conversion costs added during the month $215,050

Ending work in process inventory:
Units in ending work in process inventory 2,300
Percent complete with respect to materials 60%
Percent complete with respect to conversion 25%


The total cost transferred from the first processing department to the next processing department during the month is closest to:______

a. $356,256
b. $380,435
c. $341,325
d. $349,856

Answer 1

c. $341,325

Step-by-step explanation:

First determine the Equivalent Units of Production

Materials

Units completed and transferred (12,300 × 100%) = 12,300

Units in Ending Work In Process Inventory ( 2,300 ×60%) = 1,380

Equivalent Units of Production = 13,680

Conversion

Units completed and transferred (12,300 × 100%) = 12,300

Units in Ending Work In Process Inventory ( 2,300 ×25%) = 575

Equivalent Units of Production = 12,875

Next Determine the Total Cost Incurred during the period

Materials

Cost in Units of Opening Work In Process = $7,100

Incurred during the period = $137,224

Total Cost = $144,324

Conversion

Cost in Units of Opening Work In Process = $6,400

Incurred during the period = $215,050

Total Cost = $221,450

Then Determine the Total Cost per Equivalent unit of Production

Cost per Equivalent unit = Total Cost / Total Equivalent Units

Materials = $144,324 / 13,680

= $10.54

Conversion = $221,450 / 12,875

= $17.20

Total = $10.54 + $17.20 = $27.74

Finally calculate total cost transferred from the first processing department to the next processing department

total cost transferred = Units transferred × Total cost per equivalent unit of production.

= 12,300 × $27.74

= $341,202

Conclusion :

The total cost transferred from the first processing department to the next processing department during the month is closest to $341,325