CandyMan Manufacturing uses a process-cost system and computes cost using the weighted average method.During the current period,the beginning work-in-process inventory cost was $15,000.Manufacturing cost added was $65,000.Suppose CandyMan's ending work-in-process inventory was valued at $22,000.What must have been the cost of goods transferred?
A)$43,000
B)$58,000
C)$65,000
D)$80,000

Question

Quizplus · Accepted Answer

Using the weighted average method, the cost per equivalent unit is calculated as:

Cost per EU = (Beginning WIP Inventory Cost + Manufacturing Cost Added) ÷ Equivalent Units

Equivalent Units are the number of units that are fully completed and transferred out, plus the equivalent units in ending WIP inventory.

The beginning WIP inventory cost is given as $15,000.
Manufacturing cost added is $65,000.
Ending WIP inventory is valued at $22,000.

To calculate equivalent units, information in terms of units completed and still in process stage is needed. However, that information is not given in the question.

So, we cannot calculate the cost per equivalent unit, and therefore cannot calculate the cost of goods transferred.

But we can eliminate choices A, C, and D because they do not consider the value of ending WIP inventory.

Therefore, the best choice is B, which is the only option that accounts for ending WIP inventory.

CandyMan Manufacturing Uses a Process-Cost System and Computes Cost Using