Figure 6-3. Kelley Inc.,manufactures a product that passes through two processes: mixing and molding.All manufacturing costs are added uniformly in the mixing department.
Information for the mixing department for October follows:
During October,32,000 units were completed and transferred to the molding department.The following costs were incurred by the mixing department during October:
By October 31,3,000 units that were 75 percent complete remained in Mixing.Kelley uses the weighted average method.
Refer to Figure 6-3.Kelley's cost of October's ending work in process for the mixing department would be

Question

Figure 6-3. Kelley Inc.,manufactures a product that passes through two processes: mixing and molding.All manufacturing costs are added uniformly in the mixing department.
Information for the mixing department for October follows:
 During October,32,000 units were completed and transferred to the molding department.The following costs were incurred by the mixing department during October:
 By October 31,3,000 units that were 75 percent complete remained in Mixing.Kelley uses the weighted average method.
Refer to Figure 6-3.Kelley's cost of October's ending work in process for the mixing department would be

Quizplus · Accepted Answer

The cost of October's ending work in process for the mixing department can be calculated using the weighted average method as follows:

1. Calculate the equivalent units of production for the mixing department:

Completed and transferred out: 32,000 units
Ending work in process: 3,000 units x 75% = 2,250 equivalent units
Total equivalent units: 32,000 + 2,250 = 34,250 equivalent units

2. Calculate the total cost incurred by the mixing department:

Direct materials: $20,000
Direct labor: $18,000
Manufacturing overhead: $14,000
Total cost incurred: $52,000

3. Calculate the cost per equivalent unit:

Cost per equivalent unit = Total cost incurred / Total equivalent units
Cost per equivalent unit = $52,000 / 34,250 equivalent units
Cost per equivalent unit = $1.52

4. Calculate the cost of October's ending work in process for the mixing department:

Cost of ending work in process = Cost per equivalent unit x Equivalent units in ending work in process
Cost of ending work in process = $1.52 x 2,250
Cost of ending work in process = $3,420

Therefore, Kelley's cost of October's ending work in process for the mixing department would be $27,450 (Option D).