Question

Kurtulus Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Beginning work in process inventory:
Units in beginning work in process inventory		2,400
Materials costs	$	8,800
Conversion costs	$	4,100
Percent complete with respect to materials		55	%
Percent complete with respect to conversion		25	%
Units started into production during the month		8,300
Units transferred to the next department during the month		7,500
Materials costs added during the month	$	111,900
Conversion costs added during the month	$	85,000
Ending work in process inventory:
Units in ending work in process inventory		3,200
Percent complete with respect to materials		70	%
Percent complete with respect to conversion		55	%

The total cost transferred from the first processing department to the next processing department during the month is closest to:

Multiple Choice

$186,418

$177,118

$165,105

$202,108

Answer 1

$165,105

Working:

a.	Caculation of equivalent units of production:
					Materials			Conversion
			Physical Units		% Materials	Equivalent Units		% Materials	Equivalent Units
	Units completed		7500		100%	7500		100%	7500
	Ending Units		3200		70%	2240		55%	1760
	Total		10700			9740			9260
b.	Calculation of Cost per Equivalent unit:
						Materials			Conversion
	Beginning Work in process costs					$                   8,800			$                   4,100
	Costs incurred during the period					$             1,11,900			$                 85,000
	Total costs					$             1,20,700			$                 89,100
	/Equivalent units of production					9740			9260
	Cost per Equivalent unit					$                 12.392			$                   9.622
c.	Calculation of cost of units transferred out:
						Equivalent Units		Cost per	Total Cost
	Cost of units transferred out							Equivalent Unit
	Materials					7500		$               12.392	$                 92,940
	Conversion					7500		$                 9.622	$                 72,165
	Total Cost of units transferred out								$ 1,65,105