QUESTION 7 Star Company manufactures expensive chairs The following data relates

Question

QUESTION 7 Star Company manufactures expensive chairs The following data relates to the month of January 2006 Beginning Work in Process (1-1-06) Completed and transferred out during January Ending Work in Process (31-1-06) Costs added during January Units 10,000 60,000 20,000 Beginning Work in Process (1-1-06) Ending Work in Process (31-1-06) Costs added during January Percentage of Completion 50% 40% Total costs $10,000 $110,000 Conversion costs 55,000 $50,000 Beginning Work in Process (1-1-06) Costs added during January Beginning Work in Process (1-1-06) Costs added during January The company uses Weighted Average Process Costing Method and materials are added at the beginning of process The cost added during the month for material o a. $60,000.00 O b.$78,000.00 O C. $80,000.00 o d. $88,000.00

Explanation / Answer

Answer is A. $ 60,000

The explanation is as follows:

The total cost added in the month of January    = $ 110,000

(this is Material cost + Conversion cost)

Less: Conversion cost added during January =     $ 50,000

Therefore, Material Cost added for the month of Jan = $ 60,000( i.e. 110,000 -50,000)

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