Macey Company uses a weighted-average process costing system. Beginning inventory consists of 6,000 units, 40% complete. Units started are 14,000, completed are 10,000, and ending inventories are 9,000 units, 70% complete. Normal spoilage is 5% of the units inspected. Direct material is added at the 75% point and spoilage inspection occurs at the 80% point. The cost per equivalent unit for materials was $1.00 and $3.00 for conversion costs.
The cost of the units completed was:
A) $40,000
B) $42,200
C) $41,760
D) $41,870

Question

Quizplus · Accepted Answer

The cost of the units completed is $41,870. This is calculated as follows:Equivalent units of production = 10,000 (completed units) + (9,000 ending units x 70% complete) = 16,300 unitsCost of materials = 16,300 units x $1.00 per equivalent unit = $16,300Cost of conversion = 16,300 units x $3.00 per equivalent unit = $48,900Total cost = $16,300 + $48,900 = $65,200Cost per unit = $65,200 / 10,000 units = $6.52Cost of units completed = 10,000 units x $6.52 per unit = $41,870

Macey Company Uses a Weighted-Average Process Costing System