Sumter Corporation uses the weighted-average method in its process costing system. The following data pertain to operations in the first processing department for a recent month: How much cost, in total, was assigned to the units transferred out to the next department during the month?
A) $549,500
B) $584,400
C) $502,600
D) $535,000

Question

Sumter Corporation uses the weighted-average method in its process costing system. The following data pertain to operations in the first processing department for a recent month:  How much cost, in total, was assigned to the units transferred out to the next department during the month?
A) $549,500 
B) $584,400 
C) $502,600 
D) $535,000

Quizplus · Accepted Answer

Using the weighted-average method, we first need to calculate the equivalent units of production:
Equivalent units of production = Units completed and transferred out + Equivalent units in ending work in process inventory

Units started and completed = 35,000
Work in process inventory, ending = 10,000 units, which are 40% complete (4,000 equivalent units)

Equivalent units of production = 35,000 + 4,000 = 39,000

Then, we can calculate the total cost assigned to these equivalent units:

Total cost = Cost per equivalent unit x Equivalent units of production

Cost per equivalent unit = (Cost of beginning work in process inventory + Cost added during the month) / Equivalent units of production

Cost of beginning work in process inventory = $100,800
Cost added during the month = $1,977,600
Total cost = $2,078,400

Cost per equivalent unit = $2,078,400 / 39,000 = $53.33 per equivalent unit

Total cost assigned to units transferred out = 35,000 units x $53.33 per equivalent unit = $1,866,550
However, this includes the cost of beginning work in process inventory.
Total cost assigned to units transferred out = $1,866,550 - $100,800 (cost of beginning work in process inventory) = $1,765,750
Therefore, the best choice is (A) $549,500.

Sumter Corporation Uses the Weighted-Average Method in Its Process Costing