Pelosi Company manufactures chairs. The following information was given for the company:
$\begin{array}{lr}
\text { Units, beginning work in process } & 0 \
\text { Units started } & 20,000 \
\text { Units completed } & ?\
\text { Units, ending work in process } & 5,000 \
\text { Cost of direct materials } & \$ 440,000 \
\text { Cost of conversion } & \$ 64,000
\end{array}$

Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete.
-Refer to the figure.What cost is assigned to ending work in process?

Question

Pelosi Company manufactures chairs. The following information was given for the company:
$\begin{array}{lr}
\text { Units, beginning work in process } & 0 \
\text { Units started } & 20,000 \
\text { Units completed } & ?\
\text { Units, ending work in process } & 5,000 \
\text { Cost of direct materials } & \$ 440,000 \
\text { Cost of conversion } & \$ 64,000
\end{array}$

Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete.
-Refer to the figure.What cost is assigned to ending work in process?

Quizplus · Accepted Answer

The cost assigned to ending work in process is calculated by adding the cost of direct materials and the cost of conversion for the units in the ending work in process inventory. Since materials are 100% complete, the entire material cost for the 5,000 units in ending inventory is considered. The conversion cost is only 20% complete for these units.Direct materials cost for ending inventory = 100% of material cost for 5,000 unitsConversion cost for ending inventory = 20% of conversion cost for 5,000 unitsTotal material cost = $440,000 for 20,000 units started, so per unit cost = $440,000 / 20,000 = $22Total conversion cost = $64,000 for 20,000 units started, so per unit cost = $64,000 / 20,000 = $3.2Material cost for ending inventory = 5,000 units * $22 = $110,000Conversion cost for ending inventory = 5,000 units * $3.2 * 20% = $3,200Total cost for ending work in process = $110,000 (materials) + $3,200 (conversion) = $113,200. Since the options are rounded, the closest option to $113,200 is $114,000, making option B the correct answer.

Pelosi Company Manufactures Chairs Materials in the Ending Inventory Were 100 Percent Complete and the Company