Delta Co. manufactures a product that is processed through two departments. The following
information was obtained for the first department in January:
• All direct materials are added at the beginning of the process, while conversion costs are
added evenly throughout the process.
• Inspection takes place when the units are 30% complete. Normal spoilage is considered to
be 1% of good units passing inspection in the period. All spoiled units are discarded.
• Beginning work-in-process consisted of 20,000 units, 40% complete with respect to
conversion costs.
• Costs in beginning inventory included direct materials of $12,750 and conversion costs of
$20,920.
• There were 47,400 units started during the month, and costs added to production during
the month totalled $33,180 for direct materials and $118,378 in conversion costs.
• A total of 50,000 units were transferred to the second department, and 16,900 units
remained in ending work-in-process, 20% complete.
3. Assume that Delta uses the weighted average method for process costing and that the
equivalent units have been correctly calculated as 67,400 for direct materials and 53,530
for conversion. What is the total cost of the units transferred to the second department for
January? (Use four decimal places for the equivalent unit cost calculations.)
a) $164,185
b) $164,623
c) $164,915
d) $165,170
