Question

Outose Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to nondetectible materials defects. Inspection occurs when units are 50% converted. Normally spoiled units generally constitute 4% of the good units passing inspection. Data for December 2015 are as follows:

WIP, beginning inventory 12/1/2015 22,000 units
Direct materials (100% complete)
Conversion costs (75% complete)
Started during December 76,000 units
Completed and transferred out 12/31/2015 72,000 units
WIP, ending inventory 12/31/2015 18,000 units
Direct materials (100% complete)
Conversion costs (65% complete)

Costs for December:
WIP, beginning Inventory:
Direct materials $ 150,000
Conversion costs 76,800
Direct materials added 222,400
Conversion costs added 290,000


What is the amount of direct materials and conversion costs assigned to ending work in process using the weighted-average process-costing method?

Question 12 options:

	$72,000; $44,460
	$37,440; $48,000
	$67,120; $44,320
	$71,136; $50,440

Answer 1

	Direct Materials	Conversion Costs
WIP, beginning inventory	150,000.00	76,800.00
Costs added during period	222,400.00	290,000.00
Total cost to account for	372,400.00	366,800.00
Divide by equivalent units	98,000.00	91700
	3.8	4
No of Units	11700	18000
	44460	72000

Equivalent units Calculation

Direct Materials = 22,000 + 76,000 = 98,000

Conversion Costs = 72,000 + (18,000 x 65%) + 8,000

=91,700

Spoiled units = (22,000 + 76,000) - (72,000 +18,000)

=8,000