Story Manufacturing produces a chemical pesticide and uses process costing

Question

There are three processing departments-Mixing, Refining, and Packaging. On January 1, the first department-Mixing-had a zero beginning balance. During January, 42,000 gallons of chemicals were started into production. During the month, 34,000 gallons were completed, and 8,000 remained in process, partially completed. In the Mixing Department, all direct materials are added at the beginning of the production process, and conversion costs are applied evenly through the process.

During January, the Mixing Department incurred $63,000 in direct materials costs and $240,000 in conversion costs. At the end of the month, the ending inventory in the Mixing Department was 60% complete with respect to conversion costs. First, calculate the equivalent units, then calculate the cost per equivalent unit, and then calculate the total cost of the product that was completed and transferred out during January. The weighted-average method is used.

The total cost of product transferred out was ________. (Round any intermediate calculations two decimal places, and your final answer to the nearest dollar.)
A) $51,000
B) $240,000
C) $303,000
D) $261,460

Answer 1

D .D)
Whole
Units Percent Complete Direct
Materials Percent Complete Conversion
Costs
Completed and transferred out 34,000 100% 34,000 100% 34,000
Ending WIP 8,000 100% 8,000 60% 4,800
Total units accounted for 42,000 42,000 38,800

Direct
Materials Conversion
Costs incurred $63,000 $240,000
Total equivalent units 42,000 38,800
Cost per equivalent unit $1.50 6.19
Units transferred out 34,000 34,000
Cost of units transferred out $51,000 $210,460

Total cost of units transferred out = $51,000 + $210,460 = $261,460