Question

A department begins the month with 100 units at a cost of $7,500 in work in process. An additional 1,000 units are started during the month and additional costs incurred are $12,500. At the end of the month, there are 200 units still in process which are 50% complete. The ending balance in Work in Process Inventory is $ .

Answer 1

Answer:

$2,000

Explanation:

For computing the ending balance in Work in Process Inventory , first, we have to calculate the equivalent unit and the cost per equivalent unit which is shown below:

= Additional units - beginning units + still in process units × completion percentage

= 1,000 units - 100 units + 200 units × 50%

= 900 units + 100 units

= 1,000 units

Now cost per equivalent unit would be

= (Beginning cost + additional cost) ÷ (equivalent units)

= ($7,500 + $12,500) ÷ (1,000 units)

= $20,000 ÷ 1,000 units

= $20

Now the ending inventory equals to

= still in process units × completion percentage × cost per equivalent unit

= 200 units × 50% × $20

= $2,000