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Winchester Salad Dressing had beginning work-in-process in July of $248,320 consisting of $101,640 of materials and $146,680 of conversion costs. There were 16,000 units (one unit equals one case of salad dressing) in beginning work-in-process, 40% complete as to conversion costs. Materials are added at the beginning of the process. During November, 34,000 were transferred out; 1,000 were spoiled and 9,000 remained in ending inventory. The spoiled units were 60% complete for conversion cost. The ending work-in-process was 70% complete for conversion cost. Costs during the period amounted to $781,200 for direct materials and $1,009,280 for conversion. Winchester uses the weighted-average-method and identifies all spoilage costs separately.
-The total cost of units transferred out assuming spoilage is written off as an expense under weighted-average was:
A) $1,680,000
B) $1,394,665
C) $1,642,880
D) $2,038,579

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Quizplus · Accepted Answer

The total cost of units transferred out is calculated by adding the cost of beginning work-in-process, costs added during the period, and then subtracting the cost of spoilage and ending inventory. Using the weighted-average method, the cost per equivalent unit is calculated, and then applied to the units transferred out. The spoilage is written off as an expense, so it is not included in the cost of units transferred out.

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