Question

A department begins the month with 100 units at a cost of $7,500 and 25% complete 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. Using FIFO, the ending balance in Work in Process Inventory is _______________ $ (rounded to nearest dollar).

Answer 1

Answer:

$1,282

Explanation:

beginning WIP = 100 units 25% complete, so EUP are 25 units

units started = 1,000

ending WIP = 200 units 50% complete, so EUP are 100 units

the company processed 75 EUP form beginning WIP (100 - 25) + 1,000 units started - 100 EUP in ending WIP (200 - 100), so total equivalent units for the month = 975

cost per EUP = $12,500 / 975 = $12.8205

ending WIP balance = 100 EUP x $12.8205  = $1,282.05 ≈ $1,282