Miramar Ltd uses a weighted-average process costing system which recognises normal spoilage as 5% of good output. During the current period, 14,000 units were started and 10,000 units completed. Materials are added at the beginning of the process, conversion costs occur uniformly, and the inspection point is at the 70% point. Beginning work in process was 6,000 units, 40% complete, and ending work in process 9,000 units, 80% complete. The cost per equivalent unit for material was $1.00 and for conversion costs $3.00. The cost of goods completed was
A) $41,550
B) $40,000
C) $40,816
D) $41,053

Question

Quizplus · Accepted Answer

The cost of goods completed is $41,550. This is calculated as follows:Equivalent units of production = 10,000 (completed units) + (9,000 units in ending work in process x 80% complete) = 17,000 unitsCost per equivalent unit for material = $1.00Cost of materials used = 17,000 units x $1.00 = $17,000Cost per equivalent unit for conversion costs = $3.00Cost of conversion costs incurred = 17,000 units x $3.00 = $51,000Total manufacturing costs = $17,000 + $51,000 = $68,000Cost of goods completed = $68,000 x 10,000 units / 17,000 units = $41,550

Miramar Ltd Uses a Weighted-Average Process Costing System Which Recognises