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A company completes 21,000 units this month and has ending work in process inventory of 3,000...

A company completes 21,000 units this month and has ending work in process inventory of 3,000 units which are estimated to be 40% complete. Total production costs are $666,000. The cost transferred to Finished Goods Inventory is $?

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Answer #1

Units completed = 21,000

Ending work in process = 3,000 units.

Degree of completion of work in process = 40%

Equivalent units of work in process = Ending work in process x Degree of completion of work in process

= 3000 *40%

= 1200

Total equivalent units of production = Units completed + Equivalent units of work in process

= 21000 + 1200

= 22200 unit

Total production costs = $666,000

Cost per equivalent unit   = Total production costs / Total equivalent units of production

= $666,000 / 22200 unit

= $30

Cost of ending work in process = Equivalent units of work in process x Cost per equivalent unit

= 1200*30

= $36000

Hope You Understood.

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