Work in process, beginning | Materials | Conversion Cost ---|---|--- $8,000 | $6,000 Current added during January | $40,000 | $32,000 Equivalent units of production | 100,000 | 95,000 Cost per equivalent unit | $0.46 | $0.41 Units completed and transferred to the next department | 90,000 units Work in process, ending | 12,000 units Materials are added at the beginning of the process. The ending work in process is 60% complete with respect to conversion costs. What cost would be recorded for the ending work in process inventory? 1) $6,420. 2) $7,364.
Answer (1)
To calculate the cost recorded for the ending work in process inventory, we need to consider both the materials and the conversion costs.
Determine the Equivalent Units for Ending Work in Process:
Since materials are added at the beginning, the equivalent units for materials in ending work in process is simply the full 12,000 units.
The ending work in process is 60% complete with respect to conversion costs. Therefore, equivalent units for conversion costs is 12 , 000 × 0.60 = 7 , 200 units.
Calculate the Costs for Materials and Conversion:
Materials Cost:
Cost per equivalent unit for materials = $0.46
Total materials cost = 12 , 000 × 0.46 = 5 , 520 dollars.
Conversion Cost:
Cost per equivalent unit for conversion = $0.41
Total conversion cost = 7 , 200 × 0.41 = 2 , 952 dollars.
Calculate Total Cost for Ending Work in Process:
Total cost = Materials cost + Conversion cost
Total cost = 5 , 520 + 2 , 952 = 8 , 472 dollars.
Upon reviewing the available multiple-choice options, none match the calculated cost of $8,472. Double-checking the calculations shows this is the correct total cost based on the provided equivalent units and cost per unit information. Therefore, neither $6,420 nor $7,364 is correct based on the given data.
