What is the cost of tungsten carbide that will be assigned to vases finished and transferred to the finishing department for the month of July at ABC Company using the weighted average method?
The cost of tungsten carbide that will be assigned to vases finished and transferred to the finishing department for the month of July using the weighted average method is $170,790. The calculation involves determining the cost of tungsten carbide used in the manufacturing process, calculating the equivalent units of production, finding the cost per equivalent unit, and finally assigning the cost of tungsten carbide to vases finished and transferred.
Cost Calculation Process
Cost of Tungsten Carbide Used:
The first step is to calculate the cost of tungsten carbide used in the manufacturing process during July.
Cost of tungsten carbide used = Quantity purchased × Purchase price per kg
Cost of tungsten carbide used = 720 kg × $280 per kg = $201,600
Equivalent Units of Production:
The next step is to calculate the equivalent units of production for the ceramic vases.
Equivalent units of production = Units completed and transferred + (Units in ending work-in-process inventory × Percentage of completion)
Equivalent units of production = 3,000 units + (1,200 units × 45%)
Equivalent units of production = 3,000 units + 540 units = 3,540 units
Cost per Equivalent Unit:
Now, find the cost per equivalent unit by dividing the total cost of tungsten carbide used by the equivalent units of production.
Cost per equivalent unit = Cost of tungsten carbide used / Equivalent units of production
Cost per equivalent unit = $201,600 / 3,540 units = $56.93 per unit
Cost Assigned to Vases Finished and Transferred:
Finally, calculate the cost of tungsten carbide assigned to vases finished and transferred by multiplying the cost per equivalent unit with the units completed and transferred.
Cost of tungsten carbide assigned = Cost per equivalent unit × Units completed and transferred
Cost of tungsten carbide assigned = $56.93 per unit × 3,000 units = $170,790
Therefore, the cost of tungsten carbide that will be assigned to vases finished and transferred to the finishing department for the month of July at ABC Company using the weighted average method is $170,790.