Ermoin Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 600 units. The costs and percentage completion of these units in beginning inventory were: A total of 5,700 units were started and 4,700 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: The ending inventory was 75% complete with respect to materials and 20% complete with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.
-The total cost transferred from the first processing department to the next processing department during the month is closest to:
A) $265,800
B) $242,055
C) $324,456
D) $251,700

Question

Ermoin Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 600 units. The costs and percentage completion of these units in beginning inventory were:  A total of 5,700 units were started and 4,700 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:  The ending inventory was 75% complete with respect to materials and 20% complete with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.
-The total cost transferred from the first processing department to the next processing department during the month is closest to:
A) $265,800 
B) $242,055 
C) $324,456 
D) $251,700

Quizplus · Accepted Answer

First, we need to calculate the equivalent units of production for materials and conversion costs separately.

For materials:
Equivalent units of beginning inventory = 600 units × 75% = 450 units
Equivalent units of units started and completed = 4,700 units × 100% = 4,700 units
Equivalent units of ending inventory = 1,200 units × 75% = 900 units
Total equivalent units of production = 450 + 4,700 + 900 = 6,050 units

For conversion costs:
Equivalent units of beginning inventory = 600 units × 30% = 180 units
Equivalent units of units started and completed = 4,700 units × 100% = 4,700 units
Equivalent units of ending inventory = 1,200 units × 20% = 240 units
Total equivalent units of production = 180 + 4,700 + 240 = 5,120 units

Next, we need to calculate the cost per equivalent unit for materials and conversion costs separately.

For materials:
Cost per equivalent unit = ($20,045 + $45,080) ÷ 8,200 equivalent units = $7.29 per equivalent unit

For conversion costs:
Cost per equivalent unit = ($16,420 + $13,915) ÷ 5,580 equivalent units = $5.29 per equivalent unit

Finally, we can calculate the cost of units transferred out of the first processing department.

Cost of units transferred out = (4,700 units × $7.29 per EU for materials) + (4,700 units × $5.29 per EU for conversion costs)
= $34,283 + $24,903
= $59,186

Therefore, the closest answer to the total cost transferred from the first processing department to the next processing department during the month is B) $242,055.

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