Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 45

Weighted-Average Method; Transferred-in Costs Holton Tool Company has two departments, assembly and finishing. The assembly department takes purchased parts and assembles the final product. The finishing department performs testing and adds other materials and packages the product. Direct materials are added at the end of the process in the finishing department. The following summarizes the finishing department’s operations for the month of July.

	Number of Units
Work-in-process, June 30, 50% complete for conversion costs	3,000
Transferred in during July	28,000
Completed during July	27,000
Work-in-process, July 31, 50% complete for conversion costs	4,000

	Costs
Work-in-process, June 30 (transferred-in costs: $40,000; conversion costs: $30,000)	$ 70,000
Transferred-in from assembly department during July	150,000
Direct materials added during July	60,000
Conversion added during July	80,000
Total to account for	$360,000

Required Calculate each of the following amounts for the finishing department using the weighted-average process costing method:

1. Equivalent units of transferred-in direct materials and conversion.

2. Unit costs of transferred-in, direct materials, and conversion.

3. Cost of goods completed and transferred out during July.

4. Cost of work-in-process inventory at July 31.

Step 1 of 14

Weighted Average Method:

Weighted Average Method is a method to determine inventory unit number which in the production from the prior period and fresh units in the current period. It is appropriate only when there is no major in the manufacturing cost per unit in opening and closing inventories count.