Inacio Corporation uses the weighted-average method in its process costing syste
ID: 2432919 • Letter: I
Question
Inacio Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:
The cost per equivalent unit for materials for the month in the first processing department is closest to:
Multiple Choice
$14.78
$15.09
$16.03
$16.54
Beginning work in process inventory: Units in beginning work in process inventory 1,400 Materials costs $ 13,500 Conversion costs $ 5,600 Percent complete with respect to materials 75 % Percent complete with respect to conversion 20 % Units started into production during the month 10,100 Units transferred to the next department during the month 9,000 Materials costs added during the month $ 172,600 Conversion costs added during the month $ 242,600 Ending work in process inventory: Units in ending work in process inventory 2,500 Percent complete with respect to materials 90 % Percent complete with respect to conversion 30 %Explanation / Answer
Calculation of equivalent units completed
Particulars
No of units
materials
conversion costs
%
Units
%
Units
Beginning inventory
1,400
75%
1,050
20%
280
Beginning inventory processed during the period
1,400
25%
350
80%
1,120
Units completed and transferred to next unit (9,000-1,400)
7,600
100%
7,600
100%
7,600
Closing stock
2,500
90%
2,250
30%
750
Weighted average Equivalent units processed (A)
11,250
9,750
Opening stock balance
13,500
5,600
Costs incurred
1,72,600
2,42,600
Total (B)
1,86,100
2,48,200
Weighted average cost per unit (B/A)
16.54
25.46
Ans) cost per equivalent unit $16.54 (Option (D) is correct)
Calculation of equivalent units completed
Particulars
No of units
materials
conversion costs
%
Units
%
Units
Beginning inventory
1,400
75%
1,050
20%
280
Beginning inventory processed during the period
1,400
25%
350
80%
1,120
Units completed and transferred to next unit (9,000-1,400)
7,600
100%
7,600
100%
7,600
Closing stock
2,500
90%
2,250
30%
750
Weighted average Equivalent units processed (A)
11,250
9,750
Opening stock balance
13,500
5,600
Costs incurred
1,72,600
2,42,600
Total (B)
1,86,100
2,48,200
Weighted average cost per unit (B/A)
16.54
25.46
Ans) cost per equivalent unit $16.54 (Option (D) is correct)