Kurtulus Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: The total cost transferred from the first processing department to the next processing department during the month is closest to: (Round "Cost per equivalent unit" to 3 decimal places.)
A) $202,600
B) $193,300
C) $175,246
D) $218,290

Question

Kurtulus Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:  The total cost transferred from the first processing department to the next processing department during the month is closest to: (Round "Cost per equivalent unit" to 3 decimal places.)
A) $202,600 
B) $193,300 
C) $175,246 
D) $218,290

Quizplus · Accepted Answer

To use the weighted-average method, we first need to calculate the cost per equivalent unit.

Cost per equivalent unit = (Total Cost of Beginning WIP Inventory + Total Cost Added During the Month) / (Equivalent Units of Beginning WIP Inventory + Equivalent Units Started and Completed During the Month)

Total Cost of Beginning WIP Inventory = $0 
Total Cost Added During the Month = $859,100 
Equivalent Units of Beginning WIP Inventory = 0 
Equivalent Units Started and Completed During the Month = 6,400

Cost per equivalent unit = $859,100 / 6,400 = $134.141

Now we can calculate the cost of units transferred out during the month:

Cost of units transferred out = Cost per equivalent unit x Equivalent units transferred out

Equivalent units transferred out = Equivalent units started and completed during the month + Equivalent units in ending WIP inventory

Equivalent units in ending WIP inventory = Materials (100%) + Conversion (60%) = 1,800

Equivalent units transferred out = 6,400 + 1,800 = 8,200

Cost of units transferred out = $134.141 x 8,200 = $1,100,572.20

Therefore, the closest answer choice is C) $175,246.

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