Question

The High Tide Company manufactures gadgets in a single process and uses the weighted average method of process costing. The following information is available:

Work in process inventory, Jan 1.                                            0 units

Units started in production    2,100 units

Units completed and transferred out 1,500 units

Work in process inventory, Dec. 31                                     600 units

Production costs:

   Direct materials $2,871

     Direct labor 2,498

   Manufacturing overhead    5,767

The units still in process are:

80% complete with respect to direct materials

40% complete with respect to conversion costs.

What is the cost of ending work in process?

	a.	3,720
	b.	1,836
	c.	2,871
	d.	8,265

Answer 1

	Materials	Conversion
Units completed and transferred out	1500	1500
Work in process, ending:
600 X 80%	480
600 X 40%		240
Equivalent units of production	1980	1740
	Materials	Conversion
Production costs	2871	8265
Divide by Equivalent units of production	1980	1740
Cost per Equivalent unit	1.45	4.75
	Materials	Conversion	Total
Work in process, ending units	480	240
X Cost per Equivalent unit	1.45	4.75
Cost of ending work in process inventory	696	1140	1836
Option B 1,836 is correct