The ending WIP Inventory in the Assembly Department contains 800 units that are 100% complete with respect to direct materials and 80% complete with respect to direct labor and overhead.The cost per equivalent unit for inventory is $3.00,which consists of $2.00 for materials,$0.80 for labor,and $0.20 for overhead.What dollar value is assigned to the ending WIP Inventory?
A)$1,600
B)$512
C)$128
D)$2,240
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

First, we need to calculate the equivalent units for the ending WIP Inventory.

Equivalent Units = Units that are 100% complete + (Units that are partially complete x Percentage of completion)

Equivalent Units = 800 + (800 x 80%) 
Equivalent Units = 1,440

Next, we can calculate the total cost of the ending WIP Inventory using the cost per equivalent unit:

Total Cost = Equivalent Units x Cost per equivalent unit

Total Cost = 1,440 x $3.00
Total Cost = $4,320

Therefore, the dollar value assigned to the ending WIP Inventory is $2,240 (Choice D).

The Ending WIP Inventory in the Assembly Department Contains 800