Asked by Jazmin Blanco Ferrufino on May 11, 2024
Verified
Vallin Manufacturing Corporation's beginning work in process inventory consisted of 8,000 units, 100% complete with respect to materials cost and 60% complete with respect to conversion costs.The total cost in the beginning inventory was $36,000.During the month, 40,000 units were transferred out.The equivalent unit cost was computed to be $2.50 for materials and $3.00 for conversion costs under the weighted-average method.Given this information, the total cost of the units completed and transferred out was:
A) $256,000
B) $185,600
C) $220,000
D) $184,000
Conversion Costs
The combined costs of direct labor and manufacturing overhead necessary to convert raw materials into finished goods.
Weighted-Average Method
An inventory costing method that calculates the cost of goods sold and ending inventory value based on the average cost of all units available for sale during the period.
Materials Cost
The cost of the raw materials used in the production of goods.
- Compute the equivalent expense per unit for materials and the cost of conversion.
- Assess data to find out equivalent units of production, unit cost, and total costs within a process costing scheme.
Verified Answer
Total cost of materials for 8,000 units = 8,000 units x $2.50 = $20,000
Since the beginning inventory was 100% complete with respect to material costs, we do not need to consider the cost of materials for the beginning inventory in calculating the cost of units completed and transferred out during the month.
Equivalent units for conversion costs = 8,000 units x 60% complete = 4,800 units equivalent
Equivalent units for conversion costs of units started during the month = 40,000 units x 100% complete = 40,000 units equivalent
Total equivalent units for conversion costs = 4,800 units equivalent + 40,000 units equivalent = 44,800 units equivalent
Total cost of conversion costs for the units completed and transferred out = 44,800 units equivalent x $3.00 per unit equivalent = $134,400
Total cost of units completed and transferred out = Total cost of materials + Total cost of conversion costs = $20,000 + $134,400 = $154,400
Therefore, the correct choice is C) $220,000.
Learning Objectives
- Compute the equivalent expense per unit for materials and the cost of conversion.
- Assess data to find out equivalent units of production, unit cost, and total costs within a process costing scheme.
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