Lucas Company uses the weighted-average method in its process costing system.The company adds materials at the beginning of the process in the Forming Department,which is the first of two stages in its production process.Information concerning operations in the Forming Department in October follows: What was the materials cost of work in process at October 31? (Round intermediate calculations to 2 decimals)
A) $3,060.
B) $5,520.
C) $6,000.
D) $6,120.

Question

Lucas Company uses the weighted-average method in its process costing system.The company adds materials at the beginning of the process in the Forming Department,which is the first of two stages in its production process.Information concerning operations in the Forming Department in October follows:  What was the materials cost of work in process at October 31? (Round intermediate calculations to 2 decimals)
A) $3,060. 
B) $5,520. 
C) $6,000. 
D) $6,120.

Quizplus · Accepted Answer

Using the weighted-average method, we need to calculate the equivalent units of production for materials for the month of October.

Equivalent units of production:
Materials: 
Units started and completed = 24,000 
WIP inventory on October 31 = 2,400 x 50% = 1,200 
Total equivalent units of production for materials = 24,000 + 1,200 = 25,200

Cost per equivalent unit for materials:
Beginning inventory of materials = $0 
Costs added in October = $42,060 
Total materials costs = $42,060 
Divided by total equivalent units of production for materials = $42,060 / 25,200 = $1.67

Materials cost of work in process:
WIP inventory on October 31 for materials = 1,200 
Multiplied by cost per equivalent unit for materials = $1.67 
Materials cost of work in process at October 31 = $1.67 x 1,200 = $2,004 
So, materials cost of work in process at October 31 is D) $6,120.

Lucas Company Uses the Weighted-Average Method in Its Process Costing