Cloud Nine International 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 average costing method.The following data are available for one of its accounting periods:
-Assume that you have calculated a direct materials cost per unit of $5 and a conversion cost per unit of $8.Under this assumption,the ending balance for Work in Process Inventory of Cloud Nine International would be
A)$147,000.
B)$165,000.
C)$123,000.
D)$195,000.

Question

Cloud Nine International 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 average costing method.The following data are available for one of its accounting periods: 
-Assume that you have calculated a direct materials cost per unit of $5 and a conversion cost per unit of $8.Under this assumption,the ending balance for Work in Process Inventory of Cloud Nine International would be
A)$147,000. 
B)$165,000. 
C)$123,000. 
D)$195,000.

Quizplus · Accepted Answer

The ending balance for Work in Process Inventory is calculated by adding the direct materials cost and conversion cost per unit, then multiplying by the number of units in process. Assuming the number of units in process is given or can be derived to match the $147,000 balance, this would be the correct choice.

Cloud Nine International Uses a Process Costing System