Stangol Co.uses process costing to account for the production of highlighter pens.Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Cost per equivalent unit has been calculated to be $8.80 for conversion costs and $7.1667 for materials.12,000 units were worked on during the period.Ending inventory still in process was 4,000 units (100% complete for materials,50% for conversion).The value of units completed and transferred out using the weighted average method would be closest to:
A)$127,733.60
B)$130,000.00
C)$152,000.00
D)$159,666.00

Question

Quizplus · Accepted Answer

Weighted average method considers both the beginning and ending work in process inventory. The cost of units completed and transferred out is calculated as follows:Units completed and transferred out = Units started - Ending work in process inventoryUnits completed and transferred out = 12,000 - 4,000Units completed and transferred out = 8,000 unitsCost of units completed and transferred out = Units completed and transferred out * Cost per equivalent unitCost of units completed and transferred out = 8,000 * (8.80 + 7.1667)Cost of units completed and transferred out = 8,000 * 15.9667Cost of units completed and transferred out = $127,733.60