Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 26

Assign Costs to Goods Transferred Out and Ending Inventory: Weighted-Average Method

Refer to the data in Exercise 8-25. Compute the cost of goods transferred out and the ending inventory using the weighted-average method.

Step 1 of 2

Compute the cost of goods transferred out and the ending inventory using the weighted-average method:

• Consider costs in beginning work in process inventory of direct materials and conversion costs.

• Then enter current period costs.

• Add costs in beginning work in process inventory and current period costs to arrive at total costs to be accounted for.

• Divide direct materials by units to arrive at cost per equivalent of direct materials.

• Divide direct conversion cost by units to arrive at cost per equivalent of conversion costs.

• Consider costs assigned to units transferred out of direct materials and conversion costs.

• Then enter cost of ending WIP inventory.

• Add costs assigned to units transferred out and cost of ending WIP inventory to arrive at total costs accounted for.

Therefore, cost transferred out total is $17,340 and cost in ending inventory total $1,992.