The Martin Rubber Company produces tires. The following information is available for Martin:
Beginning work in process inventory: 2,000 tires, 100% complete for direct materials, 60% complete for conversion costs, cost of direct materials = $57,100, cost of direct labor and manufacturing overhead allocated = $19,020
Current period activity: 15,100 tires started into production ,12,600 tires completed, cost of direct materials added = $302,000, cost of direct labor and manufacturing overhead allocated = $232,980
Ending work in process inventory: 4,500 units, 100% complete for direct materials, 40% complete for conversion costs
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Assuming Martin uses the FIFO method, what was the cost of work in process at the end of the period?

Question

Quizplus · Accepted Answer

The cost of work in process at the end of the period under the FIFO method includes the cost of direct materials and conversion costs for the ending work in process inventory. Since the ending inventory is 100% complete for direct materials and 40% complete for conversion costs, we calculate the costs based on the current period's costs and the degree of completion. The calculation involves determining the cost per unit for materials and conversion costs from the current period and applying these to the ending inventory levels and their completion percentages.

The Martin Rubber Company Produces Tires