Matrix Inc. calculates cost for an equivalent unit of production using both the
ID: 2500522 • Letter: M
Question
Matrix Inc. calculates cost for an equivalent unit of production using both the weighted-average and the FIFO methods. Data for July Work-in-process inventory, July 1 (37,700 units) Direct materials (100% completed) $130,210 Conversion (52% completed) $82,180 Balance in work in process inventory, July 1 $212,390 Units started during July 96,000 Units completed and transferred 108,000 Work-in-process inventory, July 31 Direct materials (100% completed) 25,700 Conversion (53% completed) Cost incurred during July Direct materials $188,000 Conversion costs $308,800 The cost of goods completed and transferred out under the weighted-average method is calculated to be: Matrix Inc. calculates cost for an equivalent unit of production using both the weighted-average and the FIFO methods. Data for July Work-in-process inventory, July 1 (37,700 units) Direct materials (100% completed) $130,210 Conversion (52% completed) $82,180 Balance in work in process inventory, July 1 $212,390 Units started during July 96,000 Units completed and transferred 108,000 Work-in-process inventory, July 31 Direct materials (100% completed) 25,700 Conversion (53% completed) Cost incurred during July Direct materials $188,000 Conversion costs $308,800 The cost of goods completed and transferred out under the weighted-average method is calculated to be:Explanation / Answer
Units in Opening WIP = 37700
Units added = 96000
Units transferred out = 108000
Units in Closing WIP = 25700
% of completion of closing WIP–direct materials = 100%
% of completion of closing WIP–conversion costs = 53%
Total equivalent units–direct materials = 108000 + 25700 x 100% = 133700
Total equivalent units–conversion costs = 108000 + 25700 x 53% = 121621
Cost of goods sold and transferred out-Direct Material = 188000 x 108000 / 133700 = $151862
Cost of goods sold and transferred out-Conversion cost = 188000 x 108000 / 121621 = $166945
Cost of goods sold and transferred out = 151862 + 166945
= $318807
% of completion of closing WIP–conversion costs = 53%
Total equivalent units–direct materials = 108000 + 25700 x 100% = 133700
Total equivalent units–conversion costs = 108000 + 25700 x 53% = 121621
Cost of goods sold and transferred out-Direct Material = 188000 x 108000 / 133700 = $151862
Cost of goods sold and transferred out-Conversion cost = 188000 x 108000 / 121621 = $166945
Cost of goods sold and transferred out = 151862 + 166945
= $318807