Mikey's Mugs uses the FIFO method of process costing. The company's ending work in process inventory consisted of 12,000 units that were 40% complete and had incurred 80% of the materials costs. The direct materials cost per equivalent unit was $2.40, and the conversion cost per equivalent unit was $3.30. What is the amount of cost Mikey would assign to ending work in process inventory?
A) $27,360
B) $38,880
C) $46,800
D) $68,400

Question

Quizplus · Accepted Answer

The cost assigned to ending work in process inventory is calculated by considering the equivalent units for materials and conversion costs. Materials cost: 12,000 units * 80% * $2.40 = $23,040. Conversion cost: 12,000 units * 40% * $3.30 = $15,840. Total cost = $23,040 + $15,840 = $38,880.

Mikey's Mugs Uses the FIFO Method of Process Costing