Question

Cosby uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are incurred evenly throughout production. The company finished 40,000 units during the period and had 15,000 units in progress at year-end, the latter at the 40% stage of completion. Total material costs amounted to $220,000; conversion costs were $414,000. The cost of the ending work in process is: A. $54,000. B. $78,000. C. $114,000.D. $195,000. E. some other amount.

Answer 1

Answer:

C. $114,000

Explanation:

The material costs are added at the beginning of the process.

Total Material Cost = $220,000

\therefore Material cost per unit = $220,000 / (40,000+15,000) = $4

\therefore Material cost of ending work in process = 15,000 units * $4 = $60,000.

Conversion costs are incurred evenly throughout the process.

Total Conversion Costs = $414,000

Total units for which conversion cost has been incurred = 40,000 + (15,000 * 40%) = 46,000 units

\therefore Conversion cost per unit = $414,000 / 46,000 units = $9.

\therefore Conversion cost of ending work in process = 6,000 units * $9 = $54,000.

Thus, Total cost of ending work in process = $60,000 + $54,000 = $114,000.