In: Accounting
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.
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 | |||||||||||||