Asked by Juyee Kamat on Jun 09, 2024
Verified
Under the weighted-average method, the cost of units transferred out of a department is computed as follows for a cost category:
A) Costs added during the period + Cost of beginning work in process inventory
B) Units transferred to the next department × Cost per equivalent unit
C) Units in ending work in process inventory × Cost per equivalent unit
D) Cost of ending work in process inventory − Cost of beginning work in process inventory
Weighted-Average Method
An inventory costing method that assigns a weighted average cost to items, blending the costs of similar items.
Units Transferred
The quantity of goods moved from one process, department, or stage of production to another.
Cost Category
A classification of costs based on their nature or function within a business, often used for accounting and budgeting purposes.
- Compute the cost of units transferred out of a department under the weighted-average method.
Verified Answer
TH
Tanner HodgesJun 15, 2024
Final Answer :
B
Explanation :
The weighted-average method calculates the cost per equivalent unit by dividing the total costs (beginning work in process inventory plus costs added during the period) by the equivalent units of production. The cost of units transferred out of a department is then calculated by multiplying the number of units transferred to the next department by the cost per equivalent unit. Therefore, the correct choice is B, which represents units transferred to the next department multiplied by the cost per equivalent unit.
Learning Objectives
- Compute the cost of units transferred out of a department under the weighted-average method.