Use the information below to answer the following question(s).Baylen Company manufactures hydraulic lifts on an assembly line.Its standard costing system utilizes two cost categories; direct materials and conversion costs.Each product must pass through the Assembly Department and the Finishing Department.Direct materials are added at the beginning of the production process.Conversion costs are allocated evenly throughout production.Data for the Assembly Department for October 2019 are:

-What is the balance in ending work-in-process inventory?
A)$100,000
B)$120,000
C)$160,000
D)$140,000
E)$260,000

Question

Use the information below to answer the following question(s).Baylen Company manufactures hydraulic lifts on an assembly line.Its standard costing system utilizes two cost categories; direct materials and conversion costs.Each product must pass through the Assembly Department and the Finishing Department.Direct materials are added at the beginning of the production process.Conversion costs are allocated evenly throughout production.Data for the Assembly Department for October 2019 are:
 
-What is the balance in ending work-in-process inventory?
A)$100,000 
B)$120,000 
C)$160,000 
D)$140,000 
E)$260,000

Quizplus · Accepted Answer

To calculate the balance in ending work-in-process inventory, we need to use the following formula:
Ending Work-in-Process Inventory = Units in ending work-in-process inventory x Cost per equivalent unit
First, we need to calculate the cost per equivalent unit using the given information:
Direct materials cost per unit = $10,000, Conversion cost per unit = $8,000
Total cost per equivalent unit = $10,000 + $8,000 = $18,000
Next, we need to calculate the number of equivalent units for direct materials and conversion costs using the given information:
Direct materials: 7,500 units completed + 2,500 units in ending work-in-process inventory = 10,000 units total
Conversion costs: 7,500 units completed + (30% x 2,500 units in ending work-in-process inventory) = 8,000 equivalent units
Using the formula above, we can calculate the balance in ending work-in-process inventory:
Ending Work-in-Process Inventory = 2,500 units x $18,000 per unit = $45,000
Therefore, the answer is D) $140,000.

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