Question

In: Accounting

The Davidson Company uses a weighted average process costing system. The following information was reported for...

The Davidson Company uses a weighted average process costing system. The following information was reported for the Assembly Process for January. Materials are added at the beginning of the process and are 100%.

Units: units % complete for conversions
work in process, 1/1 60,000 15%
started 105,000
work in process, 1/31 40,000 20%
Costs:
Materials Conversion
beginning work in process $ 16,500 $ 33,250
current costs $643,500 $332,500


What is the cost assigned to the units completed and transferred to finishing?

a.$976,000

b.$843,750

c.$708,750

d.$777,500

e.None of these choices are correct.

Solutions

Expert Solution

b.$843,750

Working:

Step-1:Calculation of physical units completed and transferred out
Beginning Units in process               60,000
Units started during the period           1,05,000
Total units to be accounted for           1,65,000
Units in ending work in process             -40,000
Units completed and transferred out           1,25,000
Step-2:Calculation of equivalent units of production
Materials Conversion
Physical Units % of completion Equivalent units % of completion Equivalent units
Units completed 1,25,000 100% 1,25,000 100% 1,25,000
Ending units in process      40,000 100%      40,000 20%         8,000
Total 1,65,000 1,65,000 1,33,000
Step-3:Calculation of cost per equivalent units
Materials Conversions Total
Beginning work in process $           16,500 $           33,250 $             49,750
Costs incurred during the period $       6,43,500 $       3,32,500 $          9,76,000
Total Costs $       6,60,000 $       3,65,750 $       10,25,750
/ Equivalent units of productions           1,65,000           1,33,000
Cost per Equivalent unit $               4.00 $               2.75
Step-4:Calculation of costs of units completed and transferred out
Equivalent units of production Cost per Equivalent units Total Costs
Materials 1,25,000 $       4.00 $       5,00,000
Conversions 1,25,000 $       2.75 $       3,43,750
Total $       8,43,750

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