Question

In: Accounting

Chae Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory...

Chae 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:

Materials costs were $7,100 and Percent complete was 75% Conversion Costs was $5,700 and Percent complete was 25%.

A total of 8,100 units were started and 7,500 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

Materials costs were $136,800, Conversion Costs was $322,400

The ending inventory was 80% 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:

Answer A: $486,614 Answer B: $472,000 Answer C: $459,200 Answer D: $424,373

Solutions

Expert Solution

Solution:

Computation of Equivalent unit of Production - Weighted Average - First Processing Department
Particulars Physical Units Material Conversion
Unit completed & Transferred out 7500 7500 7500
Closing WIP: 1100
Material (80%) 880
Conversion (75%) 825
Equivalent units of production 8600 8380 8325
Computation of Cost per equivalent unit of Production - Weighted Average - First Processing Department
Particulars Material Conversion
Opening WIP $7,100.00 $5,700.00
Cost Added during month $136,800.00 $322,400.00
Total cost to be accounted for $143,900.00 $328,100.00
Equivalent units of production 8380 8325
Cost per Equivalent unit $17.172 $39.411
Computation of Cost of ending WIP and units completed & transferred out - Weighted Average - First Processing Department
Particulars Material Conversion Total
Equivalent unit of Ending WIP 880 825
Cost per equivalent unit $17.172 $39.411
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit) $15,111 $32,514 $47,626
Units completed and transferred 7500 7500
Cost of units completed & Transferred (Unit completed * cost per equivalent unit) $128,789 $295,586 $424,374

Therefore total cost transferred from the first processing department to the next processing department during the month is closest to $424,373

Therefore option D is correct.


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