Exercise 4-22 Analysis of Total Costs; Weighted-Average (LO 4-5) Savannah Textil

Question

Exercise 4-22 Analysis of Total Costs; Weighted-Average (LO 4-5) Savannah Textiles Company manufactures a variety of natural fabrics for the clothing industry. The following data pertain to the Weaving Department for the month of September Equivalent units of direct material (weighted-average method) Equivalent units of conversion (weighted-average method) Units completed and transferred out during September 76,866 6e,ee8 58,0ee The cost data for September are as follows Work in process, September 1 Direct material Conversion $117,960 49,952 Costs incurred during September Direct material Conversion $225,846 328,848

Explanation / Answer

(1). Cost of goods completed and transferred out = $649600

Explanation;

Weighted average cost of Direct Material ($117960 + $225040) / 70000 = $4.90

Weighted average cost of Conversion ($49952 + $328048) / 60000 = $6.30

Thus, cost of goods completed and transferred out of the Weaving Department = 58000 units * ($4.90 + $6.30)

58000 units * $11.20 = $649600

(2). Cost of the September 30, work in process inventory in the weaving department = $71400

Explanation;

Cost of the September 30, work in process inventory in the weaving department for materials (70000 – 58000) * $4.90 = $58800

Cost of the September 30, work in process inventory in the weaving department for conversion (60000 – 58000) * $6.30 = $12600

Thus, Cost of the September 30, work in process inventory in the weaving department ($58800 + $12600) = $71400

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