Talamoto Co. manufactures a single product that goes through two processes — mixing and cooking. The following data pertains to the Mixing Department for September.Material P is added at the beginning of work in the Mixing Department. Material Q is also added in the Mixing Department, but not until units of product are forty percent completed with regard to conversion. Conversion costs are incurred uniformly during the process.
The cost of goods completed and transferred out under the weighted-average method is calculated to be:
A) $1,094,800.
B) $957,600.
C) $856,000.
D) $932,000.
E) $887,000.

Question

Talamoto Co. manufactures a single product that goes through two processes — mixing and cooking. The following data pertains to the Mixing Department for September.Material P is added at the beginning of work in the Mixing Department. Material Q is also added in the Mixing Department, but not until units of product are forty percent completed with regard to conversion. Conversion costs are incurred uniformly during the process.
The cost of goods completed and transferred out under the weighted-average method is calculated to be:
A) $1,094,800. 
B) $957,600. 
C) $856,000. 
D) $932,000. 
E) $887,000.

Quizplus · Accepted Answer

To calculate cost of goods completed and transferred out, we need to find the equivalent unit of production for both material and conversion cost.
Equivalent Units of Material = 
Beginning Inventory + Units started and completed - Ending Inventory = 
4,000 + 72,000 - 12,000 = 64,000
Equivalent Units of Conversion = 
Beginning Inventory + Units started and completed - Ending Inventory = 
4,000 + 72,000 - 12,000 = 64,000
Total Cost of Material = $100,000 + $88,000 = $188,000
Total Cost of Conversion = $180,000
Cost per equivalent unit of material = $188,000/64,000 = $2.94
Cost per equivalent unit of conversion = $180,000/64,000 = $2.81

So, the cost of goods completed and transferred out = 
(Equivalent units of Material x Cost per equivalent unit of Material) + 
(Equivalent units of Conversion x Cost per equivalent unit of Conversion) = 
(64,000 x $2.94) + (64,000 x $2.81) = $957,600
Therefore, the best choice is B.