Question

Gunes Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory were:

	Cost				Percent Complete
Materials costs	$	10,600				65%
Conversion costs	$	12,800				30%

A total of 8,500 units were started and 7,400 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

	Cost
Materials costs	$	142,100
Conversion costs	$	359,500

The ending inventory was 50% complete with respect to materials and 35% complete with respect to conversion costs.

The cost of ending work in process inventory in the first processing department according to the company’s cost system is closest to:

Answer 1

Equivalent Units of Production (EUP)	Direct Materials		Conversion
Units completed and transferred out (7,400 units X 100%))	7,400 EUP		7,400 EUP
Units of ending work in process
Direct materials ( 1,900 units X 50%)	950 EUP
Conversion (1,900 X 35%)			665 EUP
Equivalent units of production	8,350 EUP		8,065 EUP

* Units in ending work in process inventory = Units in beginning work in process + Units started in this period - Units completed and transferred out = 800 + 8,500 - 7,400 = 1,900 units

Cost per EUP			Direct Materials		Conversion
Costs of beginning work in process			$10,600		$12,800
Costs of incurred this period			142,100		359,500
Total costs			$152,700		$372,300
÷EUP			8,350 EUP		8,065 EUP
Cost per EUP			$18.29 per EUP		$46.16 per EUP

Costs of ending work in process inventory
Direct matrials ( 950 EUP X 18.29 per EUP)	$17,375.5
Conversion (665 EUP X 46.16 per EUP)	$30,696.4		$48,071.9

The cost of ending work in process inventory in the first processing department = $48,071.9