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 during May?

Question

Quizplus · Accepted Answer

First, we need to calculate the equivalent units of production for conversion costs:
9,000 (completed units) + (1,200 x 40%) = 9,480 equivalent units

Next, we can use the equivalent cost per unit for conversion costs to calculate the cost of the ending Work in Process inventory:
1,200 x 40% x $0.70 = $336

Therefore, the ending Work in Process inventory during May was $1,416 ($336 for conversion costs and $1,080 for direct materials).

Fox Lane Gifts Uses Process Costing and Determined an Equivalent