Cosby uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are incurred evenly throughout production. The company finished 40,000 units during the period and had 15,000 units in progress at year-end, the latter at the 40% stage of completion. Total material costs amounted to $220,000; conversion costs were $414,000.
The cost of goods completed is:
A) $312,000.
B) $414,000.
C) $520,000.
D) $634,000.
E) None of the answers is correct.

Question

Quizplus · Accepted Answer

To determine the cost of goods completed, we need to add together the total costs (both material and conversion) incurred on the units completed during the period:

Total Costs = Material Costs + Conversion Costs
Total Costs = $220,000 + $414,000
Total Costs = $634,000

Since 40,000 units were completed, the cost per unit is:

Cost per Unit = Total Costs ÷ Number of Units Completed
Cost per Unit = $634,000 ÷ 40,000
Cost per Unit = $15.85

So the cost of goods completed is:

Cost of Goods Completed = Cost per Unit × Number of Units Completed
Cost of Goods Completed = $15.85 × 40,000
Cost of Goods Completed = $634,000

Therefore, the correct answer is C) $520,000.

Cosby Uses a Weighted-Average Process-Costing System