Question

Answer the following questions using the information below: The Recliner Company manufacturers a standard massage chair. During February, the firm's Assembly Department started production of 150,000 chairs. During the month, the firm completed 170,000 chairs and transferred them to the Finishing Department. The firm ended the month with 20,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used byRecliner. Conversion costs are incurred uniformly over the production cycle. Beginning inventory was 70% complete as to conversion costs and ending inventory was 40% complete as to conversion costs. The beginning inventory was $200,000 and $118,560 for direct materials and conversion costs, respectively. The Recliner Company spent $408,000 and $330,000 for direct materials and conversion costs during February, respectively. What is the cost of ending inventory?

Answer 1

	Equivalent units:
					Equivalent units
				Units	Direct materials	Conversion
	Units completed and transferred			170000	170000	170000
	Ending work in process			20000	20000	8000
					(20000*100%)	(20000*40%)
	Total				190000	178000
	Cost per equivalent unit:
					Direct materials	Conversion
	Total costs:
	Beginning inventory				200000	118560
	Costs added in Feb.				408000	330000
	Total costs			a	608000	448560
	Equivalent units			b	190000	178000
	Cost per equivalent unit			a/b	3.2	2.52
	Cost of ending inventory:
				$
	Direct materials		(20000*3.2)	64000
	Conversion		(8000*2.52)	20160
	Total			84160
	Cost of ending inventory=$ 84160