Hall 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 1,000
Materials costs $7,100
Conversion costs $6,400
Percent complete with respect to materials 65%
Percent complete with respect to conversion 30%
Units started into production during the month 13,600
Units transferred to the next department during the month 12,300
Materials costs added during the month $137,224
Conversion costs added during the month $215,050

Ending work in process inventory:
Units in ending work in process inventory 2,300
Percent complete with respect to materials 60%
Percent complete with respect to conversion 25%

The total cost transferred from the first processing department to the next processing department during the month is closest to:

a. $356,256
b. $380,435
c. $341,325
d. $349,856

c. $341,325

Explanation:

First determine the Equivalent Units of Production

Materials

Units completed and transferred (12,300 × 100%)              = 12,300

Units in Ending Work In Process Inventory ( 2,300 ×60%) =   1,380

Equivalent Units of Production                                             = 13,680

Conversion

Units completed and transferred (12,300 × 100%)              = 12,300

Units in Ending Work In Process Inventory ( 2,300 ×25%) =      575

Equivalent Units of Production                                             = 12,875

Next Determine the Total Cost Incurred during the period

Materials

Cost in Units of Opening Work In Process     =      $7,100

Incurred during the period                               = $137,224

Total Cost                                                          = $144,324

Conversion

Cost in Units of Opening Work In Process     =     $6,400

Incurred during the period                               = $215,050

Total Cost                                                          = $221,450

Then Determine the Total Cost per Equivalent unit of Production

Cost per Equivalent unit = Total Cost / Total Equivalent Units

Materials = $144,324 / 13,680

               = $10.54

Conversion = $221,450 / 12,875

                   = $17.20

Total = $10.54 + $17.20 = $27.74

Finally calculate total cost transferred from the first processing department to the next processing department

total cost transferred  = Units transferred × Total cost per equivalent unit of production.

                                     = 12,300 × $27.74

                                     = $341,202

Conclusion :

The total cost transferred from the first processing department to the next processing department during the month is closest to $341,325

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