Hache Corporation uses the weighted-average method in its process costing system
ID: 445927 • Letter: H
Question
Hache Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Units in beginning work in process inventory 700 Materials costs $8,000 Conversion costs $7,800 Percent complete with respect to materials 50% Percent complete with respect to conversion 35% Units started into production during the month 5,200 Units transferred to the next department during the month 4,400 Materials costs added during the month $90,300 Conversion costs added during the month $125,600 Ending work in process inventory: Units in ending work in process inventory 1,500 Percent complete with respect to materials 50% Percent complete with respect to conversion 30% Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places. The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:
Explanation / Answer
Equivalent Cost per unit
Unit Transferred to next department=4400
WIP Unit completed For Conversion=1500*30%=450
Wip Unit completed For material=1500*50%=750
Total Number of units for conversion= 5200+450=5650
Total Number of units for material=5200+750=5950
Total conversion cost=$125,600 +$7800 =$133400
Total material cost=$90,300 +$8000 = $98300
Equivalent Cost per unit of conversion cost=133400/5650= 23.61
Equivalent Cost per unit of material cost=98300/5950= 16.521
Closing WIP Inventory Value= 23.61*450+16.521*750 =$23015.25
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