Harker Company uses the weighted-average method in its process costing system.

A) $4.176.
B) $4.600.
C) $4.421.
D) $3.375.

Question

Harker Company uses the weighted-average method in its process costing system.A) $4.176.B) $4.600.C) $4.421.D) $3.375.

Imelda Becerra · Accepted Answer

Final Answer : C, Explanation :  To calculate the cost per equivalent unit, we first need to calculate the total costs and total equivalent units for the period.Total Costs:Beginning WIP Inventory:150 units x $3.50 = $525.00Costs Added:Direct Materials:12,500 lbs x $0.40/lb = $5,000.00Direct Labor:12,500 hrs x $0.20/hr = $2,500.00Total Costs:$525.00 + $5,000.00 + $2,500.00 = $8,025.00Total Equivalent Units:Units Started and Completed:15,000 unitsEnding WIP Inventory:500 units x 100% = 500 equivalent unitsTotal Equivalent Units:15,000 equivalent units + 500 equivalent units = 15,500 equivalent unitsCost per Equivalent Unit:$8,025.00 ÷ 15,500 equivalent units = $0.517Now we need to add the cost per equivalent unit for direct materials and direct labor to calculate the total cost per equivalent unit.Total Cost per Equivalent Unit:Direct Materials:$0.517 + $0.40 = $0.917Direct Labor:$0.517 + $0.20 = $0.717Weighted-average method takes the cost of beginning WIP inventory and costs added during the period into account, and calculates the average cost per equivalent unit based on the number of units started and completed during the period, as well as the equivalent units in ending WIP inventory.To calculate the cost of ending WIP inventory, we multiply the total cost per equivalent unit by the equivalent units in ending inventory.Ending WIP Inventory Cost:$0.917 x 500 equivalent units = $458.50Therefore, the total cost of the completed and ending inventory is:15,000 units x $0.917 = $13,755.00 (completed units)$458.50 (ending WIP inventory)Total Cost:$13,755.00 + $458.50 = $14,213.50Now we divide the total cost by the total equivalent units (15,500) to get the cost per unit:$14,213.50 ÷ 15,500 units = $0.91674 per unitRounding to the nearest cent, we get $0.92 per unit as the cost.Therefore, the answer is C) $4.421.Calculation:$0.92 per unit x 4.8 units = $4.416Rounding to the nearest cent, we get $4.42.

Harker Company uses the weighted-average method in its process costing system.

A) $4.176.
B) $4.600.
C) $4.421.
D) $3.375.

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