Baron Corporation has two sequential processing departments: Assembly then Shaping. The Shaping Department reports the following information. Conversion costs are applied evenly throughout the process. The total cost of units in ending WIP inventory-Shaping would be closest to

Question

Baron Corporation has two sequential processing departments: Assembly then Shaping. The Shaping Department reports the following information. Conversion costs are applied evenly throughout the process.  The total cost of units in ending WIP inventory-Shaping would be closest to

Quizplus · Accepted Answer

To find the total cost of units in ending WIP inventory-Shaping, we need to calculate the equivalent units of production for material and conversion costs separately and then multiply them by the cost per equivalent unit for each category.

For conversion costs:
Equivalent units of production = Units completed and transferred out + Units in ending WIP inventory * (Percentage of completion)
= 40,000 + 7,000*(100%)
= 47,000

Cost per equivalent unit of conversion = Total conversion costs for the period / Equivalent units of production for conversion costs
= ($750,000 + $85,000 + $42,500) / 47,000
= $19.89

Total cost of units in ending WIP inventory-Shaping (conversion costs) = Units in ending WIP inventory * Cost per equivalent unit of conversion
= 7,000 * $19.89
= $139,230

Therefore, the closest answer is D) $167,440, which is the only answer that is within a reasonable range of the calculated total cost.

Baron Corporation Has Two Sequential Processing Departments: Assembly Then Shaping