Question

Below is selected information from Chipset's cost of production report: Cost per equivalent unit in process...

Below is selected information from Chipset's cost of production report:

Cost per equivalent unit in process

$10

Units completed

15,000

Total costs in process

$332,000

Equivalent units of materials in ending inventory

2,000

Cost per equivalent unit of materials

$6


The ending inventory of work-in-process is complete as to materials.

The cost of conversion in the ending inventory is:

Select one:

A. $170,000

B. $308,000

C. $ 30,800

D. $ 15,800

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Homework Answers

Answer #1

Solution: The correct option is “A” i.e $ 1,70,000(see note below)

Note:

Particulars

Materials

Conversion

Units completed

And transferred

15000

15000

Units in ending

WIP

2000

X units

Total Equivalent Units

17000

15000+X units

Cost per Equivalent Unit

$ 6

$ 4

Total cost per equivalent unit in process=$10

Cost per equivalent units in materials=$ 6

Cost per equivalent units in conversion=$ 4

Total costs in process=$ 3,32,000

Therefore $ 6*17000 units+ $ 4(15000+ X units)=$ 332000

X= 42500 units

Equivalent units of conversion in ending inventory=42500 units

Therefore the Cost of conversion in the ending inventory is 42500 units *$4/equivalent unit=$ 1,70,000

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