Arp Company uses the weighted-average method in to estimate product costs, and reports the following costs for last month for the first department of a three stage production process:
Beginning work in process:
Units 400
Material cost $3,100
Conversion costs $3,900
Percentage of completion as to materials 55%
Percentage of completion as to conversion costs 25%
Units started 7,200
Units transferred to the next department 6,600
Material cost added $85,800
Conversion costs added $ 248,200
Ending work in process:
Units 1,000
Percentage complete as to materials 85%
Percentage complete as to conversion costs 70%
Required:
- What is the cost of the ending work in process of the department?
- What is the cost of the units transferred to the next department?
- Identify the type of product costing system used by Arp, and an alternative method, and state define and distinguish the two methods.
- What does Arp's choice of costing system tell you about the product Arp makes and sells?