Read, Inc. instituted a new process in October 2012. During October, 24,000 unit
ID: 2380491 • Letter: R
Question
Read, Inc. instituted a new process in October 2012. During October, 24,000 units were started in Department A. Of the units started, 19,200 were transferred to Department B, and 4,800 remained in Work-in-Process at October 31, 2012. The Work-in-Process at October 31, 2012, was 100% complete as to material costs and 50% complete as to conversion costs. Material costs of $77,400 and conversion costs of $86,400 were charged to Department A in October. What were the total costs transferred to Department B assuming Department A uses weighted-average process costing?
$142,200. $117,120. $163,800. $138,720.Explanation / Answer
Material cost per unit = total material cost/(total units) = 77400/(19200+4800) = 3.225
Conversion cost per unit = total conversion cost/(units transferred + 50% of WIP) = 86400/(19200+50%*4800) = 4
So cost transferred to B = (material cost per unit+conversion cost per unit)*no of units = (3.225+4)*19200 = 138,720
Hope this helped ! Let me know in case of any queries.
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