A deodorant manufacturer offers the following information: The units in ending WIP Inventory were 60% complete for materials and 40% complete for conversion costs.
What is the total cost of units in ending WIP?

Question

A deodorant manufacturer offers the following information:  The units in ending WIP Inventory were 60% complete for materials and 40% complete for conversion costs.
What is the total cost of units in ending WIP?

Quizplus · Accepted Answer

We can use the weighted average method to calculate the cost of units in ending WIP. 
Total equivalent units = Units transferred to next department + Units in ending WIP inventory
= 11ea8243_f269_53ba_9591_87fce24eb6b6_TB3059_00 
= 37,800 + (25,200 × 0.6 for materials) + (25,200 × 0.4 for conversion costs) 
= 37,800 + 15,120 + 10,080 
= 63,000 equivalent units 
Total cost incurred = $735,840 + $244,800 
= $980,640 
Cost per equivalent unit = Total cost incurred / Total equivalent units 
= $980,640 / 63,000 
= $15.556 per equivalent unit 
Cost of units in ending WIP = Cost per equivalent unit × Equivalent units in ending WIP 
= $15.556 × (25,200 × 0.6 for materials) + ($15.556 × 25,200 × 0.4 for conversion costs)
= $551,040

A Deodorant Manufacturer Offers the Following Information: the Units