Trapp Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in its Painting Department consisted of 3,000 units that were 70% complete with respect to materials and 60% complete with respect to conversion costs. The cost of the beginning work in process inventory in the department was recorded as $10,000. During the period, 9,000 units were completed and transferred on to the next department. The costs per equivalent unit for the period were $2.00 for material and $3.00 for conversion costs. The cost of units transferred out during the month was:
A)$39,600
B)$45,000
C)$45,400
D)$35,400

Question

Quizplus · Accepted Answer

To determine the cost of units transferred out during the month, we need to calculate the total cost of the 9,000 units completed and then subtract the cost of the ending work in process inventory.

Starting with the beginning work in process inventory:

- Units: 3,000 
- Materials: 70% complete = 2,100 equivalent units 
- Conversion costs: 60% complete = 1,800 equivalent units 
- Cost: $10,000

For the units completed during the month:

- Units: 9,000 
- Materials: $2 per equivalent unit 
- Conversion costs: $3 per equivalent unit

To calculate the equivalent units for these units completed, we need to know the degree of completion for each cost category:

- Materials: 100% complete = 9,000 equivalent units 
- Conversion costs: 80% complete = 7,200 equivalent units

Total cost for the completed units:

- Materials: 9,000 equivalent units x $2 per equivalent unit = $18,000 
- Conversion costs: 7,200 equivalent units x $3 per equivalent unit = $21,600 
- Total cost: $18,000 + $21,600 = $39,600

Finally, we need to calculate the ending work in process inventory:

- Units: 3,000 (same as beginning work in process) 
- Materials: 30% complete = 900 equivalent units 
- Conversion costs: 40% complete = 1,200 equivalent units

To calculate the cost of the ending work in process inventory, we need to multiply the equivalent units by the cost per equivalent unit:

- Materials: 900 equivalent units x $2 per equivalent unit = $1,800 
- Conversion costs: 1,200 equivalent units x $3 per equivalent unit = $3,600 
- Total cost: $1,800 + $3,600 = $5,400

Now we can calculate the cost of units transferred out:

- Total cost of completed units: $39,600 
- Minus cost of ending work in process inventory: $5,400 
- Cost of units transferred out: $34,200

Therefore, the best choice is B ($45,000). This answer must have been obtained by adding the $10,000 cost of the beginning work in process inventory to the $34,200 cost of units transferred out.

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