Question

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

Answer 1

Answer:

$36,000

Explanation:

The first step is to calculate the equivalent unit of work in process

=degree of completion × ending work in process

= 40/100 × 3000

= 0.4 × 3000

= 1,200

The total equivalent units of production can be calculated as follows

= 21,000 + 1,200

= 22,000 units

The cost per equivalent unit can be calculated as follows

= 660,000/22,000

= $30

Therefore the cost of ending work in process can be calculated as follows

= equivalent unit × cost per equivalent unit

= 1,200 × 30

= $36,000