The LaRose Company uses weighted-average process costing to account for its prod

Question

The LaRose Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process, whereas direct materials are added at the beginning of the process.

During August, the company transferred 650,000 units of product to finished goods. The company started 990,000 units in August.

At the end of August, the work in process inventory consists of 450,000 units that are 60% complete with respect to conversion. Beginning inventory had $320,000 of direct materials and $214,000 of conversion cost. The direct material cost added in August is $1,320,000 and the conversion cost added is $1,845,000.

Beginning work in process consisted of 110,000 units that were 100% complete with respect to direct materials and 50% complete with respect to conversion. Of the units completed, 110,000 were from beginning work in process and 540,000 units were started and completed during the period.

a. What were the total costs that were transferred out?

B. What were the total costs assigned to ending work in process inventory?

Explanation / Answer

Equivalent units Physical units Direct materials Conversion Units transferred 650000 650000 650000 Ending work in process inventory 450000 450000 270000 Equivalent units 1100000 1100000 920000 Direct materials Conversion Total costs 1640000 2059000 Equivalent units 1100000 920000 Cost per Equivalent unit 1.49091 2.23804 a Total costs that were transferred out =650000*(1.49091+2.23804)= 2423819 b Total costs assigned to ending work in process inventory = (450000*1.49091)+(270000*2.23804)= 1275181

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