Question

A company completes 21,000 units this month and has ending goods in process inventory of 3,000 units which are estimated to be 40% complete. Total production costs are $666,000. The cost of ending Goods in Process Inventory is:______.

Answer 1

Answer: $36,000

Explanation:

First calculate the Equivalent Units of Production;

= 21,000 + (3,000 * 40%)

= 21,000 + 1,200

= 22,200 units

Then find the cost of each units.

= Total production cost/ Equivalent units of production

= 666,000/22,200

= $30 per unit

Then the cost of ending Goods in Process Inventory is:

= Equivalent ending process inventory units * cost per unit

= 1,200 * 30

= $36,000