Guo Corporation uses the weighted-average method in its process costing system.
ID: 2499774 • Letter: G
Question
Guo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 500 units. The costs and percentage completion of these units in beginning inventory were:
A total of 9,700 units were started and 9,100 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:
The ending inventory was 85% complete with respect to materials and 75% complete with respect to conversion costs. Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places. The total cost transferred from the first processing department to the next processing department during the month is closest to: (SHOW WORK)
$623,600
$638,122
$614,200
$569,301
Explanation / Answer
Question-
(WN-1) Quantitative Schedule
Particular
Units
Beginning Units
500
Units Introduced
9700
Units to be accounted for
10,200
Transferred Out
9,100
Ending Units
1,100
Units Accounted For
10,200
(WN-2) Calculation of Equivalent Units
Physical Units
Direct materials
Conversion Cost
transferred Out (a)
9,100
9,100
9,100
Ending WIP Inventory
1,100
1,100
1,100
% Completion of Ending WIP
85 %
75 %
Equivalent units of WIP (b)
935
825
Total Equivalent units (a+b)
10,035
9,925
Cost per Equivalent Units =
(Cost in Beginning WIP + Current Period Cost)/ (Equivalent units of transferred out + Equivalent units of Ending WIP)
Particulars
Material
Conversion Cost
Total
Beginning Cost
7,300
2,100
Cost Incurred in current period
237,800
376,400
Total Cost (a)
245,100
378,500
Equivalent units (b)
10,035
9,925
Cost per equivalent units (a/b)
24.42
38.14
62.561
Assignment of Cost for transferred out units.
Total cost to be assigned = transferred units x Cost per unit of equivalent units
= 9100 x 62.61
Cost = $569,301
Answer = $569,301 (Option D)
Particular
Units
Beginning Units
500
Units Introduced
9700
Units to be accounted for
10,200
Transferred Out
9,100
Ending Units
1,100
Units Accounted For
10,200
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