Stangol Co.uses process costing to account for the production of highlighter pens.Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Cost per equivalent unit has been calculated to be $8.80 for conversion costs and $7.1667 for materials.12,000 units were worked on during the period.Ending inventory still in process was 4,000 units (100% complete for materials,50% for conversion).The value of ending inventory using the weighted average method would be closest to:
A)$31,933.20
B)$46,266.80
C)$63,866.40
D)$130,000.00

Question

Quizplus · Accepted Answer

First, we need to calculate the equivalent units of production for both materials and conversion costs:

Equivalent units of materials = units completed and transferred out + units in ending inventory
= (12,000 - 4,000) + (4,000 x 100%)
= 12,000

Equivalent units of conversion costs = units completed and transferred out + (ending inventory units x % complete)
= (12,000 - 4,000) + (4,000 x 50%)
= 14,000

Next, we need to calculate the total cost incurred during the period:

Total cost = (Equivalent units of materials x Cost per equivalent unit of materials) + (Equivalent units of conversion costs x Cost per equivalent unit of conversion costs)
= (12,000 x $7.1667) + (14,000 x $8.80)
= $126,200

Finally, we can calculate the value of ending inventory using the weighted average method:

Value of ending inventory = (Cost per equivalent unit x Equivalent units in ending inventory)
= ($8.80 x 4,000 x 50%) + ($7.1667 x 4,000 x 100%)
= $18,666.67 + $28,600
= $46,266.80

Therefore, the best choice is B.