Under the weighted-average method, the cost of units transferred out of a department is computed as follows for a cost category:
A) Costs added during the period + Cost of beginning work in process inventory
B) Units transferred to the next department × Cost per equivalent unit
C) Units in ending work in process inventory × Cost per equivalent unit
D) Cost of ending work in process inventory − Cost of beginning work in process inventory

Question

Quizplus · Accepted Answer

The weighted-average method calculates the cost per equivalent unit by dividing the total costs (beginning work in process inventory plus costs added during the period) by the equivalent units of production. The cost of units transferred out of a department is then calculated by multiplying the number of units transferred to the next department by the cost per equivalent unit. Therefore, the correct choice is B, which represents units transferred to the next department multiplied by the cost per equivalent unit.

Under the Weighted-Average Method, the Cost of Units Transferred Out