Claremore Industries uses a weighted-average process-costing system.All materials are added at the beginning of the process; conversion costs are incurred evenly throughout production.The company ﬁnished 40,000 units during the period and had 15,000 units in progress at year-end, the latter at the 40% stage of completion.Total material costs amounted to $220,000; conversion costs were $414,000. The cost of goods completed is:

Question

Quizplus · Accepted Answer

To determine the cost of goods completed, we need to add the total costs incurred during the period and divide them by the equivalent units completed. The equivalent units completed are the units finished during the period (40,000) plus the units in ending work-in-process (15,000 x 40% = 6,000). Therefore, the equivalent units completed are 46,000 (40,000 + 6,000). The total costs incurred are the material costs ($220,000) plus the conversion costs ($414,000), which equal $634,000. Dividing this total cost by the equivalent units completed ($634,000 ÷ 46,000) gives a cost per unit of $13.78. Multiplying this cost per unit by the number of units completed (40,000) gives a cost of goods completed of $551,200.

Claremore Industries Uses a Weighted-Average Process-Costing System