The Taylor Company uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the FIFO costing method.The following data are available for one of its accounting periods: $\begin{array} { l l }
&\text { Units }\
\text { Beginning work in process }&\text { 26,000 (70 percent complete for conversion }\
& \text { costs) } \
\text { Units started } & 180,000 \
\text { Units transferred out } & 191,000 \
\text { Ending work in process } & 15,000 \text { (60 percent complete far conversion } \
& \text { costs) }
\end{array}$ Assume that you have calculated a direct materials cost per unit of $4 and a conversion cost per unit of $7.Under this assumption,the ending balance for Work in Process Inventory would be

Question

The Taylor Company uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the FIFO costing method.The following data are available for one of its accounting periods: $\begin{array} { l l } 
&\text { Units }\
\text { Beginning work in process }&\text { 26,000 (70 percent complete for conversion }\
& \text { costs) } \ 
\text { Units started } & 180,000 \
 \text { Units transferred out } & 191,000 \ 
\text { Ending work in process } & 15,000 \text { (60 percent complete far conversion } \ 
& \text { costs) }
 \end{array}$ Assume that you have calculated a direct materials cost per unit of $4 and a conversion cost per unit of $7.Under this assumption,the ending balance for Work in Process Inventory would be

Quizplus · Accepted Answer

To find the ending balance for Work in Process Inventory, we need to apply the FIFO costing method to the units that are completed and transferred out during the period and the units that are still in process at the end of the period.

First, let's calculate the equivalent units for direct materials and conversion costs:

Direct materials:
Units completed = 39,000
Units in process = 5,000 (100% complete for direct materials)
Equivalent units = 39,000 + 5,000 = 44,000

Conversion costs:
Units completed = 39,000
Units in process = 5,000 (60% complete for conversion costs)
Equivalent units = 39,000 + (5,000 x 0.6) = 42,000

Next, let's calculate the total cost for each category:

Direct materials:
44,000 equivalent units x $4 per unit = $176,000

Conversion costs:
42,000 equivalent units x $7 per unit = $294,000

Finally, let's use the FIFO method to allocate the costs to the units completed and transferred out and the units still in process:

Cost of units completed and transferred out:
Direct materials = 39,000 units x $4 per unit = $156,000
Conversion costs = 39,000 units x $7 per unit = $273,000
Total cost = $429,000

Cost of units still in process:
Direct materials = 5,000 units x $4 per unit = $20,000
Conversion costs = 5,000 units x 40% x $7 per unit = $14,000
Total cost = $34,000

Therefore, the ending balance for Work in Process Inventory is $34,000, which is the cost of the 5,000 units that are still in process at the end of the period. The correct answer is D.

The Taylor Company Uses a Process Costing System Assume That You Have Calculated a Direct Materials Cost Per