Bombard Company manufactures plastic cups in one department.The following information is available:
$\begin{array} { l }
\text {Work-In-Process Inventory, beginning }&0\
\text { Units started}&60,000\
\text {Units completed and transferred }&48,000\
\text {Work-In-Process Inventory, end}&12,000\
\end{array}$

$\begin{array} { l }
\text {Direct materials added }&\$ 240,000\
\text {Direct labor }&\$164,780 \
\text {Factory overhead }&\$ 82,000\
\end{array}$

The units in the ending Work-In-Process Inventory are 100 percent complete with respect to direct materials and 50 percent complete with respect to conversion costs.The cost of the ending Work-In-Process Inventory is ________.

Question

Bombard Company manufactures plastic cups in one department.The following information is available:
$\begin{array} { l  }
 \text {Work-In-Process Inventory, beginning }&0\
 \text { Units started}&60,000\
 \text {Units completed and transferred }&48,000\
 \text {Work-In-Process Inventory, end}&12,000\
\end{array}$

$\begin{array} { l  }
 \text {Direct materials added }&\$ 240,000\
 \text {Direct labor }&\$164,780 \
 \text {Factory overhead }&\$ 82,000\
\end{array}$

The units in the ending Work-In-Process Inventory are 100 percent complete with respect to direct materials and 50 percent complete with respect to conversion costs.The cost of the ending Work-In-Process Inventory is ________.

Quizplus · Accepted Answer

The cost of the ending Work-In-Process Inventory is calculated by adding the costs of direct materials, direct labor, and factory overhead, and then applying the completion percentages to these costs for the units in ending inventory. The total costs are $240,000 (direct materials) + $164,780 (direct labor) + $82,000 (factory overhead) = $486,780. The ending inventory is 100% complete for direct materials, so $240,000 is fully allocated. For conversion costs (direct labor + factory overhead = $164,780 + $82,000 = $246,780), only 50% is allocated to the ending inventory. Thus, the cost of the ending inventory is $240,000 (for direct materials) + 0.5 * $246,780 (for conversion costs) = $240,000 + $123,390 = $363,390. However, this total cost needs to be divided by the total units to find the cost per unit, and then multiplied by the number of units in ending inventory (12,000) to find the ending inventory cost. The calculation provided directly leads to the cost of ending inventory without this step, indicating a mistake in the explanation process. The correct approach is to calculate the cost per unit for the ending inventory based on the completion percentages and then multiply by the number of units in ending inventory. Given the error in the explanation process, the correct calculation for the ending inventory cost should focus on the specific costs attributed to the ending inventory based on the provided completion percentages. The direct materials cost for the ending inventory is fully attributed ($240,000), and the conversion costs are calculated at 50% for the ending inventory. The correct calculation should directly apply these percentages to the ending inventory units.

Bombard Company Manufactures Plastic Cups in One Department The Units in the Ending Work-In-Process Inventory Are 100 Percent