James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1".
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the total conversion costs transferred to finished goods?
A)$810,000.
B)$855,000.
C)$900,000.
D)$910,000. (1,700 + 200)x $450 = $855,000

Question

James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1". 
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the total conversion costs transferred to finished goods?
A)$810,000. 
B)$855,000. 
C)$900,000. 
D)$910,000. (1,700 + 200)x $450 = $855,000

Quizplus · Accepted Answer

Using the weighted-average method, total conversion costs transferred to finished goods can be calculated as follows:

Total conversion costs = (Units completed and transferred out + Equivalent units in ending work in process inventory) x Cost per equivalent unit

Units completed and transferred out = 1,700 units
Equivalent units in ending work in process inventory = 200 units (since all materials are added at the beginning of the process, only conversion costs are considered in calculating the equivalent units)
Cost per equivalent unit = $450 (given in the question)

Total conversion costs = (1,700 + 200) x $450 = $855,000

Therefore, the correct answer is B ($855,000).

James Automotive Group Is a Maker of Engines for High