The Molding Department at Miley Corporation had 10,000 units in process on July 1 and 6,000 units in process on July 31.During July,it started 46,000 units.The cost per equivalent unit produced in July was $2.50.If the equivalent units produced in July were 48,000,what were the costs incurred during the month?

Question

Quizplus · Accepted Answer

To calculate the costs incurred during the month we have to use the weighted average method formula:

Costs incurred = Cost per equivalent unit x Equivalent units produced

Cost per equivalent unit = $2.50

Equivalent units produced = Completed units + Units in ending WIP x % completion

Completed units = 46,000 - 6,000 = 40,000

Units in ending WIP = 6,000

% completion = 100% (assuming all units in WIP were fully completed)

Equivalent units produced = 40,000 + 6,000 = 46,000

Costs incurred = $2.50 x 46,000 = $115,000

Therefore, the best choice is C, $120,000.

The Molding Department at Miley Corporation Had 10,000 Units in Process