Question

alamoto Co. manufactures a single product that goes through two processes — mixing and cooking. The following data pertains to the Mixing Department for September.

Work-in-process Inventory Sept. 1   28,000   units
Conversion complete   70%     
Work-in-process inventory Sept. 30   16,000   units
Conversion complete   50%     
Units started into production in Sept.   72,000     
Units completed and transferred out   ?   units
Costs        
Work-in-process inventory Sept.1   $120,000     
Material P   110,000     
Material Q   165,000     
Conversion        
Costs added in September        
Material P   $180,000     
Material Q   165,000     
Conversion   354,800     

Material P is added at the beginning of work in the Mixing Department. Material Q is also added in the Mixing Department, but not until units of product are forty percent completed with regard to conversion. Conversion costs are incurred uniformly during the process.

The cost of goods completed and transferred out under the weighted-average method is calculated to be:
      
$1,094,800.
      
$957,600.
      
$856,000.
      
$932,000.
      
$887,000.

Answer 1

Solution:

Closing WIP = Opening WIP + Unit Started - Unit Transferred out

16000 = 28000 + 72000 - Unit Transferred out

Unit Transferred out = 84000

Computation of Equivalent unit of Production (Weighted Average)
Particulars	Physical Units	Material P	Material Q	Conversion
Unit completed & Transferred out	84000	84000	84000	84000
Closing WIP:	16000
Material P (100%)		16000
Material Q (100%)			16000
Conversion (50%)				8000
Equivalent units of production	100000	100000	100000	92000

Computation of Cost per equivalent unit of Mixing Deptt
Particulars	Material P	Material Q	Conversion
Opening WIP	$120,000.00	$110,000.00	$165,000.00
Cost Added during June	$180,000.00	$165,000.00	$354,800.00
Total cost to be accounted for	$300,000.00	$275,000.00	$519,800.00
Equivalent units of production	100000	100000	92000
Cost per Equivalent unit	$3.00	$2.75	$5.65

Computation of Cost of ending WIP and units completed & transferred out
Particulars	Material P	Material Q	Conversion	Total
Equivalent unit of Ending WIP	16000	16000	8000
Cost per equivalent unit	$3.00000	$2.75000	$5.65000
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$48,000	$44,000	$45,200	$137,200
Units completed and transferred	84000	84000	84000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$252,000	$231,000	$474,600	$957,600

Therefore cost of units completed and transferred will be $957,600.