Answer:
$2,700,000
Explanation:
since materials are added at the beginning of the process, we must first determine the number of units that started to be produced during April:
finished goods + ending inventory - beginning inventory = 10,000 + 2,000 - 500 = 11,500
the $1,380,000 must be divided by 11,500 units started = $1,380,000 / 11,500 = $120
total materials = [(11,500 - 2,000) x $120] + $60,000 (beginning inventory) = $1,140,000 + $60,000 = $1,200,000
conversion costs are added as the process is carried out so we must determine equivalent units:
- beginning work in process: 500 x 60% = 300 equivalent units
- 10,000 units were completed during April
- ending inventory: 2,000 x 25% = 500 equivalent goods
total equivalent units processed = 10,000 + 500 - 300 = 10,200
conversion cost per equivalent unit = $1,530,000 / 10,200 = $150
total conversion costs = [(10,200 - 500) x $150] + $45,000 (beginning inventory) = $1,455,000 + $45,000 = $1,500,000
total cost of finished goods inventory = $1,200,000 + $1,500,000 = $2,700,000
