A golf ball manufacturer gives us its data for the year: Units in ending WIP Inventory were 90% complete for materials and 60% complete for conversion costs.
On December 31, the total cost of the units in ending WIP would be closest to

Question

A golf ball manufacturer gives us its data for the year:  Units in ending WIP Inventory were 90% complete for materials and 60% complete for conversion costs.
On December 31, the total cost of the units in ending WIP would be closest to

Quizplus · Accepted Answer

To calculate the cost of units in ending WIP inventory, we need to use the concept of equivalent units. Equivalent units represent the number of fully completed units that could have been produced given the resources used to make partially completed units.

For materials, we have 90% completion, so the equivalent units are 100% * 90% = 90%. For conversion costs, we have 60% completion, so the equivalent units are 100% * 60% = 60%.

Next, we need to calculate the cost per equivalent unit. The total cost of the units in ending WIP is given as $5,930. We divide this by the total equivalent units (90% + 60% = 150%) to get the cost per equivalent unit.

Cost per equivalent unit = $5,930 / 1.5 = $3,953.33

Finally, we calculate the cost of the units in ending WIP by multiplying the equivalent units by the cost per equivalent unit.

Cost of units in ending WIP inventory = (90% + 60%) * $3,953.33 = 1.5 * $3,953.33 = $5,930

Therefore, the closest answer is B) $7393.

A Golf Ball Manufacturer Gives Us Its Data for the Year