Middle Co.uses process costing to account for the production of chocolate candy bars.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 $4.00 for conversion costs and $3.00 for materials.3,000 units were in beginning inventory (100% complete for materials,80% for conversion).12,000 units were started and completed during the period.Ending inventory still in process was 6,000 units (100% complete for materials,40% for conversion).The value of ending inventory using the FIFO method would be:
A)$27,600.00
B)$34,699.80
C)$47,899.80
D)$97,500.00

Question

Quizplus · Accepted Answer

The ending inventory consists of 6,000 units, which are 100% complete for materials and 40% complete for conversion. The cost for materials is $3.00 per unit, and the cost for conversion is $4.00 per unit. Therefore, the cost for materials is 6,000 units * $3.00 = $18,000. The cost for conversion is 6,000 units * 40% * $4.00 = $9,600. The total cost of ending inventory is $18,000 + $9,600 = $27,600.

Middle CoUses Process Costing to Account for the Production of Chocolate