Mundes Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in its Painting Department consisted of 2,000 units that were 60% complete with respect to materials and 40% complete with respect to conversion costs. The cost of the beginning work in process inventory in the department was recorded as $8,800. During the period, 8,000 units were completed and transferred on to the next department. The costs per equivalent unit for the period were $4.00 for material and $5.00 for conversion costs. The cost of units transferred out during the month was:
A) $40,000
B) $63,200
C) $72,000
D) $80,800

Question

Quizplus · Accepted Answer

To calculate the cost of the units transferred out during the period, we need to first determine the cost of the units in the beginning work in process inventory and the cost of the units added during the period.

Cost of beginning work in process inventory: 
2,000 units x 60% complete for materials x $4.00 per equivalent unit = $4,800 
2,000 units x 40% complete for conversion costs x $5.00 per equivalent unit = $4,000 
Total cost of beginning work in process inventory = $8,800

Cost of units added during the period: 
8,000 units x $4.00 per equivalent unit for material = $32,000 
8,000 units x $5.00 per equivalent unit for conversion costs = $40,000 
Total cost of units added during the period = $72,000

Total cost of units transferred out: 
Cost of beginning work in process inventory + Cost of units added during the period 
$8,800 + $72,000 = $80,800

Therefore, the answer is choice C.

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