LDR Manufacturing produces a chemical pesticide and uses process costing.There are three processing departments-Mixing,Refining,and Packaging.On January 1,2012,the first department-Mixing-had a zero beginning balance.During January,40,000 gallons of chemicals were started into production.During the month,32,000 gallons were completed,and 8,000 remained in process,partially completed.In the Mixing Department,all direct materials are added at the beginning of the production process,and conversion costs are applied evenly through the process.
-During January,the Mixing Department incurred $48,000 in direct materials costs and $211,600 in conversion costs.At the end of the month,the ending inventory in the Mixing Department was 60% complete with respect to conversion costs.
The total cost of product in ending inventory was ________.

Question

LDR Manufacturing produces a chemical pesticide and uses process costing.There are three processing departments-Mixing,Refining,and Packaging.On January 1,2012,the first department-Mixing-had a zero beginning balance.During January,40,000 gallons of chemicals were started into production.During the month,32,000 gallons were completed,and 8,000 remained in process,partially completed.In the Mixing Department,all direct materials are added at the beginning of the production process,and conversion costs are applied evenly through the process. 
-During January,the Mixing Department incurred $48,000 in direct materials costs and $211,600 in conversion costs.At the end of the month,the ending inventory in the Mixing Department was 60% complete with respect to conversion costs.
The total cost of product in ending inventory was ________.

Quizplus · Accepted Answer

To calculate the total cost of product in ending inventory, we need to use the weighted average method. This method takes into account the percentage of completion of the ending inventory in relation to the total conversion costs incurred.
 
Total costs incurred in Mixing Department = $48,000 + $211,600 = $259,600

Equivalent units of production (EUP) = Completed units + (Ending inventory units x % complete)
EUP for conversion costs = 32,000 + (8,000 x 60%) = 32,800

Cost per equivalent unit of conversion costs = Total costs incurred ÷ EUP for conversion costs
= $259,600 ÷ 32,800
= $7.92 per EUP

Total cost of product in ending inventory = Ending inventory units x Cost per EUP
= 8,000 x $7.92
= $37,200

Therefore, the correct answer is C) $37,200.

LDR Manufacturing Produces a Chemical Pesticide and Uses Process Costing