Zuniga, Inc. uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: On May 1: Beginning inventories = 250 units, 40% complete
Direct materials costs = $1,250
Conversion costs = $1,356
Transferred-in costs = $2,560
During May: Direct materials costs incurred = $6,000
Conversion costs incurred = $17,013
On May 31: Ending Inventories = 350 units, 20% complete
Using the weighted average method, the cost of the units transferred out was:

Question

Quizplus · Accepted Answer

The weighted average method assigns costs to units based on the average cost per unit. The average cost per unit is calculated by dividing the total cost of production by the total number of units produced. In this case, the total cost of production is $38,040 + $6,000 + $17,013 = $61,053. The total number of units produced is 1,200 + 350 = 1,550. Therefore, the average cost per unit is $61,053 / 1,550 = $39.39. The cost of the units transferred out is 1,200 * $39.39 = $47,268.