Holder Incorporated Uses the Weighted Average Method for Its Process

question 2

Essay

Holder Incorporated uses the weighted average method for its process costing system.The Assembly Department at began March with 24,000 units in Work in Process (WIP)Inventory,all of which were completed and transferred out during March.An additional 32,000 units were started during the month,12,000 of which were completed and transferred out during March.A total of 20,000 units remained in Work in Process Inventory at the end of March,and were at varying levels of completion as follows:
Direct materials: 80 percent complete
Direct labor: 60 percent complete
Overhead: 70 percent complete

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Definitions:

Average Costs

The total costs of production divided by the number of units produced, representing the cost per unit.

Returns To Scale

The change in output resulting from a proportional change in all inputs in the production process; can be increasing, constant, or decreasing.

Increasing Returns To Scale

See Economies of scale.

Economies Of Scale

Exist when average costs fall as output increases.