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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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For August, Kimbrell Manufacturing has costs in BWIP equal to $112,500. During August, the cost incurred was $450,000. Using the weighted average method, Kimbrell had 125,000 equivalent units for August. There were 100,000 units transferred out during the month. The cost of goods transferred out is

  1. a. $500,000.
  2. b. $400,000.
  3. c. $450,000.
  4. d. $360,000.
  5. e. $50,000.

To determine

Identify the cost of goods transferred out of Company KM.

Explanation

Equivalent Units of Production:

The total units of finished goods along with those goods that are not fully complete are known as equivalent units of production. In other words, equivalent units of production measures both completed and nearly completed units.

c.

Use the following formula to calculate cost of units transferred out:

Cost of units transferred out=Unit cost×Transferred units=$4.50×100,000 units=$450,000

The cost of unit transferred out is $450,000. Therefore, option c. is correct

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