Question

Kramer Corp began the current period with 4,000 units in process that were 100% complete as to materials and 60% complete as to conversion. Costs of $7,500 in direct materials and $4,700 in conversion costs were incurred in manufacturing those units in the previous period. Kramer ended the current period with 20,000 units completed and 5,000 units still in process. Work in process was 100% complete as to materials and 70% complete as to conversion costs. Kramer incurred $67,500 in direct materials costs, $7,000 in direct labor costs, and $40,000 in manufacturing overhead costs during the period.

Using the weighted average method, compute the cost assigned to goods completed and transferred out.

$54,000

$22,700

$104,000

$37,200

Answer 1

Answer:

$104,000

Explanation:

Step 1: Flow of goods calculation

Units transferred out	20,000
Add: WIP Ending inventory	5,000
Less:WIP, beginning inventory	4000
Units started during the period	21,000

Step 2: Equivalent unit calculation

Flow of Production	Physical units	Direct materials	Conversion
Work in process, beginning	4,000
Started during period	21,000
To account for	25,000
Good units completed	20,000	20,000	20,000
Work in process, ending	5,000	5,000	3,500
Equivalent units	25,000	25,000	23,500

Step 3: Calculation of cost per equivalent unit:

Costs	Totals	Direct Materials	Conversion
Work in process, beginning	$12,200	$7,500	$4,700
Costs added during period	$114,500	$67,500	$47,000
Total costs to account for	$126,700	$75,000	$51,700
Divided by equivalent units		25,000	23,500
Equivalent unit costs	5.2	3	2.2

Step 4: Assignment of cost

Cost of goods completed and transferred during the month:

= units transferred out × Total cost per equivalent unit

= 20,000 × $5.2

= $104,000