Saved Help Save lache Corporation uses the weighted-average method in its proces
ID: 2339797 • Letter: S
Question
Saved Help Save lache Corporation uses the weighted-average method in its process costing system. The frst processing department, the Welding epartment, started the month with 17,800 units in its beginning work in process inventory that were 20% complete with respect to onversion costs. The conversion cost in this beginning work in process inventory was $8,120. An additional 90,600 units were started int production during the month and 93,600 units were completed in the Welding Department and transferred to the next processing department. There were 14,800 units in the ending work in process inventory of the Welding Department that were 90% complete with respect to conversion costs. A total of $204,000 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to: Multiple Choice $2.045 $2.280Explanation / Answer
Solution :
(1) : Computation of cost per equivalent unit for conversion costs for the months is closes to -
Under Weighted Average Method ,we add Conversion cost of beginning inventory with current cost
= $8,120 + $2,04,000
= $2,12,120
Now, Units = 93,600(100%) + 14,800 (90%)
= 93,600 + 13,320
= 1,06,920
Note : Finished goods are always 100% , Ending WIP is 90% as given in the above question -
So, Now Conversion cost per Equivalent units = 2,12,120 / 1,06,920
= 1.984
Hence, option (C) is Correct from the given options .
(2) :
Material Conversion total
units and Transferred out -
Units transferred to next department (a) = 50,000 units
Cost per Equivalent units(b) = $1.30 and 3.00
Total cost of Units Completed and transferred out = (a) * (b)
= 50,000 * $1.30 + 50,000*3.00
= 65,000 + 1,50,000
= 2,15,000 .
Total cost of Units Completed and transferred out = 2,15,000
Hence Option (a) is Correct .
(3) :
Given data : All of the following statements are correct Whebn referring to process costing Except -
Option (A) is Correct .
That is Process costing Would be Appropriate for a jeweler Who makes custom jewelery to order .
Process costing is like employment arrange costing aside from the way that activity arrange costing is taken up when the assets are particularly owing to unique requests/items though process costing is utilized when the units delivered are vague to one another as the expenses are gathered in a division and afterward assigned to singular items in light of their fulfillment.
Process costing can't be utilized if there should be an occurrence of custom requests as the item that is made is discernable and expenses can be effectively allotted to the product.In this case, work arrange costing must be utilized and not process costing.
Hence, option (A) is Correct from the Given Options .
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