Scoria produces a product for which all direct materials are added at the beginn

Question

Scoria produces a product for which all direct materials are added at the beginning of the production process. The following is a review of Scoria’s cost and inventory records for the recent year: Units Materials Conversion WIP Jan 1st (80% complete with respect to Conversion costs) 125,000 $145,000 $182,500 Units started into production 600,000 Cost added during the year: Materials $580,000 Conversion $1,043,000 Units Completed during the year 525,000 In its process costing system, Scoria is using the weighted-average cost method. Ending inventory for the year is 60% complete with respect to conversion costs. What amount of cost was transferred to finish goods inventory?

Explanation / Answer

Ending work in process = (125000+600000-525000) = 200000 units

Equivalent unit of material = 525000+(200000*100%) = 725000 unit

equivalent unit of conversion = 525000+(200000*60%) = 645000 unit

Cost per equivalent unit of material = (145000+580000)/725000 = 1 per equivalent unit

Cost per equivalent unit of conversion = (182500+1043000)/645000 = 1.9 per equivalent unit

Cost of transferred to finished goods inventory = (1+1.9)*525000 = 1522500

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