TryFit Co.uses process costing to account for the production of energy food bars.Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process.Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs.April costs were $36,000 for materials and $40,000 for conversion costs.During April 8,000 units were completed.Ending work in process inventory 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)$15,966.60
B)$23,133.20
C)$31,933.20
D)$65,000.00

Question

Quizplus · Accepted Answer

1. Calculate the equivalent units for materials and conversion costs:
Materials:
Units completed: 8,000
Ending WIP (100% complete): 4,000
Total equivalent units: 12,000

Conversion costs:
Units completed: 8,000
Ending WIP (50% complete): 2,000
Total equivalent units: 10,000

2. Calculate the cost per equivalent unit for materials and conversion costs:
Materials:
Beginning inventory: $7,000
Current costs: $36,000
Total costs: $43,000
Cost per equivalent unit: $43,000 / 12,000 = $3.58

Conversion costs:
Beginning inventory: $4,000
Current costs: $40,000
Total costs: $44,000
Cost per equivalent unit: $44,000 / 10,000 = $4.40

3. Calculate the total cost of ending inventory:
Materials:
Units in ending WIP: 4,000
Cost per equivalent unit: $3.58
Total cost: 4,000 x $3.58 = $14,320

Conversion costs:
Units in ending WIP: 2,000
Cost per equivalent unit: $4.40
Total cost: 2,000 x $4.40 = $8,800

4. Add the costs of ending inventory for both materials and conversion costs:
$14,320 + $8,800 = $23,120

Rounding to the nearest cent, the value of ending inventory using the weighted average method is $23,133.20 (option B).

TryFit CoUses Process Costing to Account for the Production of Energy