The Matsui Lubricants plant uses the weighted-average method to account for its

Question

The Matsui Lubricants plant uses the weighted-average method to account for its work-in-process inventories. The accounting records show the following information for a particular day:

Compute the cost of goods transferred out and the ending inventory using the weighted-average method. (Do not round your intermediate calculations. Round your final answers to nearest whole dollar value.)

Cost of goods transferred out =

Costs in ending inventory =

  Beginning WIP inventory      Direct materials $ 1,954      Conversion costs 549   Current period costs      Direct materials 22,900      Conversion costs 12,600

Explanation / Answer

Units transferred out = 610 + 3800 - 1200 = 3,210 units

Equivalent units as per Weighted Average Method
For Material = 3210 + (1200 x 40%) = 3,690 units
For conversion = 3210 + (1200 x 22%) = 3,474 units

Cost per equivalent units:
Material = (1954+22900)/3690 = $6.74 per unit
Conversion = (549+12600)/3474 = $3.78 per unit

Cost of transferred out units = 3210*(6.74+3.78) = $33,771
Cost of ending inventory = (1200*0.4*6.74) + (1200*0.22*3.78) = $4,232

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