At Panther Company, materials are added at the beginning of the process and conversion costs are added uniformly. The total cost of units remaining in ending WIP inventory is closest to

Question

At Panther Company, materials are added at the beginning of the process and conversion costs are added uniformly.  The total cost of units remaining in ending WIP inventory is closest to

Quizplus · Accepted Answer

The total cost of units remaining in the ending WIP inventory can be calculated as follows:

Total cost per unit = (Total manufacturing costs / Total units produced) 
Total manufacturing costs = Direct materials + Direct labor + Manufacturing overhead 
Total manufacturing costs = $2,610,000 + $1,213,500 + $872,500 
Total manufacturing costs = $4,696,000

Total units produced = Units started in production + Units completed and transferred out + Units remaining in ending WIP inventory 
Total units produced = 74,000 + 60,000 + Units remaining in ending WIP inventory 
Units remaining in ending WIP inventory = Total units produced - Units started in production - Units completed and transferred out 
Units remaining in ending WIP inventory = 74,000 + 60,000 - 33,000 
Units remaining in ending WIP inventory = 101,000

Total cost per unit = ($4,696,000 / 101,000) 
Total cost per unit = $46.49

Total cost of units remaining in ending WIP inventory = (Units remaining in ending WIP inventory x Total cost per unit) 
Total cost of units remaining in ending WIP inventory = (101,000 x $46.49) 
Total cost of units remaining in ending WIP inventory = $4,698,490

The closest answer is B) $241,650.

At Panther Company, Materials Are Added at the Beginning of the Process