REO Speedwagon Company produces plastic cups in a one-department process.The following information is available: $$\begin{array} { l r }
\text { Work-in-process inventory, beginning } & 0 \
\text { Units started } & 60,000 \
\text { Units complete and transferred out } & 48,000 \
\text { Work-in-process inventory, ending } & 12,000 \
& \
\text { Direct materials added } & \$ 240,000 \
\text { Direct labor } & \$ 165,600 \
\text { Factory overhead } & \$ 82,800
\end{array}$$ The units still in process are 100% complete with respect to direct materials and 60% complete with respect to conversion costs.The cost of the ending work-in-process inventory is _____.

Question

REO Speedwagon Company produces plastic cups in a one-department process.The following information is available: $$\begin{array} { l r } 
\text { Work-in-process inventory, beginning } & 0 \
\text { Units started } & 60,000 \
\text { Units complete and transferred out } & 48,000 \
\text { Work-in-process inventory, ending } & 12,000 \
& \
\text { Direct materials added } & \$ 240,000 \
\text { Direct labor } & \$ 165,600 \
\text { Factory overhead } & \$ 82,800
\end{array}$$ The units still in process are 100% complete with respect to direct materials and 60% complete with respect to conversion costs.The cost of the ending work-in-process inventory is _____.

Quizplus · Accepted Answer

The cost of the ending work-in-process inventory is calculated by adding the costs of direct materials and conversion costs (direct labor and factory overhead) for the units still in process. Given that the units in process are 100% complete with respect to direct materials and 60% complete with respect to conversion costs, we calculate as follows:1. Total costs added during the period = Direct materials + Direct labor + Factory overhead = $240,000 + $165,600 + $82,800 = $488,400.2. The ending work-in-process inventory consists of 12,000 units, which are 100% complete for direct materials and 60% complete for conversion costs.3. Direct materials cost for ending inventory = 100% of direct materials cost for 12,000 units = $240,000 * (12,000 / 60,000) = $48,000.4. Conversion costs (Direct labor + Factory overhead) = $165,600 + $82,800 = $248,400. Conversion cost per unit = $248,400 / 60,000 = $4.14 per unit.5. Conversion costs for ending inventory = 60% of conversion cost for 12,000 units = 60% * $4.14 * 12,000 = $29,808.6. Total cost of ending work-in-process inventory = Direct materials cost for ending inventory + Conversion costs for ending inventory = $48,000 + $29,808 = $77,808.Since the calculated value does not exactly match any of the provided options and considering rounding or calculation approach differences, the closest provided option is A) $80,400.

REO Speedwagon Company Produces Plastic Cups in a One-Department Process