Question

Data concerning a recent period’s activity in the Prep Department, the first processing department in a company that uses process costing, appear below:

	Materials			Conversion
Equivalent units in ending work in process inventory		2,160			840
Cost per equivalent unit	$	14.56		$	5.33

A total of 21,000 units were completed and transferred to the next processing department during the period.

Required:

1. Compute the cost of ending work in process inventory for materials, conversion, and in total.

2. Compute the cost of the units completed and transferred out for materials, conversion, and in total.

(Round your final answers to the nearest whole dollar amount.)

		Materials	Conversion	Total
1.	Cost of ending work in process inventory
2.	Cost of units transferred out

Answer 1

Solution 1:

Computation of Cost of ending WIP (Prep Department)
Particulars	Material	Conversion (Labor + Overhead)	Total
Equivalent unit of Ending WIP	2160	840
Cost per equivalent unit	$14.56	$33.00
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$31,450	$27,720	$59,170

Solution 2:

Computation of Cost of units completed (Prep Department)
Particulars	Material	Conversion (Labor + Overhead)	Total
Units completed and transferred	21000	21000
Cost per equivalent unit	$14.56	$33.00
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$305,760	$693,000	$998,760