Vallin Manufacturing Corporation's beginning work in process inventory consisted of 8,500 units, 100% complete with respect to materials cost and 60% complete with respect to conversion costs. The total cost in the beginning inventory was $41,000. During the month, 45,000 units were transferred out. The equivalent unit cost was computed to be $3.00 for materials and $3.50 for conversion costs under the weighted-average method. Given this information, the total cost of the units completed and transferred out was:
A) $306,000
B) $235,600
C) $292,500
D) $234,000

Question

Quizplus · Accepted Answer

To calculate the total cost of units completed and transferred out, we need to first calculate the cost of ending work in process inventory.

Units in ending work in process inventory = Units in beginning work in process inventory + Units started during the month - Units transferred out
Units in ending work in process inventory = 8,500 + 45,000 - 45,000 = 8,500

To calculate the cost of ending work in process inventory, we need to calculate the equivalent units for both materials and conversion costs.

Equivalent units for materials = Units started during the month + (Units in ending work in process inventory * % complete for materials)
Equivalent units for materials = 45,000 + (8,500 * 100%) = 53,500

Equivalent units for conversion = Units started during the month + (Units in ending work in process inventory * % complete for conversion)
Equivalent units for conversion = 45,000 + (8,500 * 60%) = 50,500

The total cost of production is the sum of the beginning work in process inventory and costs incurred during the month.

Total cost of production = Cost of beginning work in process inventory + Costs incurred during the month
Total cost of production = $41,000 + (53,500 * $3.00 for materials) + (50,500 * $3.50 for conversion) 
Total cost of production = $41,000 + $160,500 + $177,250 = $378,750

Finally, we can calculate the cost of units completed and transferred out by subtracting the cost of ending work in process inventory from the total cost of production.

Cost of units completed and transferred out = Total cost of production - Cost of ending work in process inventory 
Cost of units completed and transferred out = $378,750 - (8,500 * $6.50) = $292,500

Therefore, the answer is choice C.

Vallin Manufacturing Corporation's Beginning Work in Process Inventory Consisted of 8,500