Figure 6-6 Pelosi Company manufactures chairs.The following information was given for the company:
Units, beginning work in process 0
Units started 20,000
Units completed ?
Units, ending work in process 5,000
Cost of direct materials $440,000
Cost of conversion $ 64,000
Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete.
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Refer to Figure 6-6.What cost is assigned to ending work in process?

Question

Quizplus · Accepted Answer

The cost assigned to ending work in process includes the cost of direct materials and the cost of conversion. The ending inventory is 5,000 units, with materials 100% complete and conversion 20% complete. The cost of direct materials per unit is $440,000 / 20,000 = $22. The cost of conversion per unit is $64,000 / (20,000 * 0.2 + 5,000 * 0.2) = $0.64. Therefore, the cost assigned to ending work in process is 5,000 units * ($22 + $0.64 * 0.2) = $114,000.

Figure 6-6 Pelosi Company Manufactures Chairs