Fox Lane Gifts uses process costing and determined an equivalent cost per unit of $0.90 for direct materials and $0.70 for conversion costs during May. There were 9,000 units completed and transferred to Finished Goods, and 1,200 units in ending Work in Process Inventory that were 100% complete with respect to direct materials and 40% complete with respect to conversion costs. What was the ending Work in Process inventory?

Question

Quizplus · Accepted Answer

The ending Work in Process inventory needs to be calculated as follows:

Direct materials = 100% complete for 1,200 units x $0.90 = $1,080 
Conversion costs = 40% complete for 1,200 units x $0.70 = $336

Total cost of ending Work in Process Inventory = $1,080 + $336 = $1,416

Therefore, the correct answer is C.

Fox Lane Gifts Uses Process Costing and Determined an Equivalent