Question

Theta Company has two departments: Mixing and Grinding. Data obtained from the Grinding Department for the month of October is as follows:

Costs:Work in process, October 1Transferred-in costs$1,550Direct materials550Conversion costs 500Total work in process$2,600Current costs:Transferred-in costs$20,450Direct materials4,450Conversion costs 8,500Total current costs$33,400
Equivalent units of output:Transferred-in materials = 200,000 unitsDirect materials added = 200,000 unitsConversion costs = 150,000 unitsDetermine the total unit cost using the weighted average method. (Round answer to three decimal places.)

Answer 1

The total unit cost for the Grinding Department using the weighted average method is $0.195 per unit when combining transferred-in costs, direct materials, and conversion costs and dividing by their respective equivalent units of output.

Step-by-step explanation:

To calculate the total unit cost using the weighted average method, we need to combine both the beginning work in process costs with the costs incurred during the month. For the Grinding Department, the costs consist of transferred-in costs, direct materials, and conversion costs.

The total costs for the month are the sum of the beginning work in process costs and the current costs:

• Transferred-in costs: $1,550 (beginning WIP) + $20,450 (current) = $22,000
• Direct materials: $550 (beginning WIP) + $4,450 (current) = $5,000
• Conversion costs: $500 (beginning WIP) + $8,500 (current) = $9,000

To find the unit costs, we divide these totals by the respective equivalent units of output:

• Transferred-in costs per unit = $22,000 / 200,000 units = $0.110
• Direct materials cost per unit = $5,000 / 200,000 units = $0.025
• Conversion cost per unit = $9,000 / 150,000 units = $0.060

Adding these together gives us the total unit cost:

Total unit cost = $0.110 + $0.025 + $0.060 = $0.195