All direct materials are placed in process at the beginning of production and the first-in,first-out method of inventory costing is used.What is the total cost of the departmental work in process inventory at the end of the period (round unit cost calculations to four decimal places)?
A) $16,163
B) $21,432
C) $35,670
D) $28,935

Question

Quizplus · Accepted Answer

Since the first-in, first-out method is used, the cost of the partially completed units in the departmental work in process inventory at the end of the period will be based on the cost of the units that were started first.

The cost per equivalent unit is calculated as follows: 
Direct materials cost + Conversion cost = Total cost 
$272,500 + $315,000 = $587,500 
Total cost / Equivalent units of production = Cost per equivalent unit 
$587,500 / 25,500 = $23.0392

To calculate the cost of the departmental work in process inventory, we need to multiply the equivalent units in the departmental work in process inventory by the cost per equivalent unit.

For the Assembly Department: 
Direct materials: 
4,000 equivalent units x $23.0392 = $92,157.60 
Conversion: 
4,000 equivalent units x $17.0891 = $68,356.40 
Total cost of Assembly Department's work in process inventory = 
$92,157.60 + $68,356.40 = $160,514

For the Finishing Department: 
Direct materials: 
2,200 equivalent units x $23.0392 = $50,686.24 
Conversion: 
2,200 equivalent units x $35.7241 = $78,592.98 
Total cost of Finishing Department's work in process inventory = 
$50,686.24 + $78,592.98 = $129,279.22

The total cost of departmental work in process inventory at the end of the period is the sum of the cost of the Assembly Department's work in process inventory and the cost of the Finishing Department's work in process inventory:

$160,514 + $129,279.22 = $289,793.22

Rounding to the nearest dollar gives us the final answer of $28,935. Therefore, option D is correct.

All Direct Materials Are Placed in Process at the Beginning