Reference: 04-03
Madsen Company uses the weighted-average method in its process costing system. During October, the Mixing Department transferred out 40,000 units. The October 31 work in process inventory in the Mixing Department consisted of 4,000 equivalent units of material and 5,000 equivalent units of labour and overhead. The cost per equivalent unit was $2.50 for materials and $6.25 for labour and overhead.
-The "Cost to account for" section of the production report for October will show a total amount equal to
A)$110,000.
B)$428,750.
C)$350,000.
D)$391,250.

Question

Quizplus · Accepted Answer

The total cost to account for includes the costs of units transferred out and the costs of ending work in process inventory. For units transferred out (40,000 units), assuming the cost per equivalent unit applies to them as well, the cost is calculated by adding the cost of materials and labor and overhead for these units. For the ending work in process inventory, the cost is calculated by multiplying the equivalent units by their respective cost per equivalent unit rates for materials and labor and overhead. The sum of these costs gives the total "Cost to account for."

Reference: 04-03 Madsen Company Uses the Weighted-Average Method in Its Process Costing