Togo Co.uses process costing to account for the production of picture frames.Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Equivalent units have been calculated to be 12,000 units for materials and 10,000 units for conversion costs.Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs.April costs were $72,000 for materials and $80,000 for conversion costs.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)$31,933.60
B)$46,266.80
C)$63,866.80
D)$130,000.00

Question

Quizplus · Accepted Answer

First, we need to calculate the cost per equivalent unit for both materials and conversion costs.

For materials:

Total cost for materials = Beginning inventory + Current period costs - Ending inventory 
Total cost for materials = $14,000 + $72,000 - (4,000 x $6) 
Total cost for materials = $94,000

Cost per equivalent unit for materials = Total cost for materials / Total equivalent units for materials 
Cost per equivalent unit for materials = $94,000 / 12,000 
Cost per equivalent unit for materials = $7.83

For conversion costs:

Total cost for conversion costs = Beginning inventory + Current period costs - Ending inventory 
Total cost for conversion costs = $8,000 + $80,000 - (4,000 x $4) 
Total cost for conversion costs = $92,000

Cost per equivalent unit for conversion costs = Total cost for conversion costs / Total equivalent units for conversion costs 
Cost per equivalent unit for conversion costs = $92,000 / 10,000 
Cost per equivalent unit for conversion costs = $9.20

Next, we need to 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 
Value of ending inventory for materials = $7.83 x 4,000 = $31,320 
Value of ending inventory for conversion costs = $9.20 x 4,000 x 0.5 = $18,400

Total value of ending inventory = Value of ending inventory for materials + Value of ending inventory for conversion costs 
Total value of ending inventory = $31,320 + $18,400 
Total value of ending inventory = $49,720

Therefore, the closest answer choice is B) $46,266.80.

Togo CoUses Process Costing to Account for the Production of Picture