Chen Company manufactures keyboards in a two-department process, Assembly and Finishing. Information on the first department, Assembly, follows:
There was no beginning inventory, and of the 200,000 units started in production 168,000 were completed and transferred to the Finishing department, while 32,000 units were still in process. These units had all materials added but were only 75 percent complete as far as conversion costs.
-The total cost of ending work-in-process inventory is
A) $352,000.
B) $292,000.
C) $264,000.
D) $240,000.

Question

Chen Company manufactures keyboards in a two-department process, Assembly and Finishing. Information on the first department, Assembly, follows:
  There was no beginning inventory, and of the 200,000 units started in production 168,000 were completed and transferred to the Finishing department, while 32,000 units were still in process. These units had all materials added but were only 75 percent complete as far as conversion costs.
-The total cost of ending work-in-process inventory is
A) $352,000. 
B) $292,000. 
C) $264,000. 
D) $240,000.

Quizplus · Accepted Answer

The total cost of ending work-in-process inventory can be calculated by adding the costs incurred in the Assembly department for the 32,000 units that were in process.

Since these units were 75% complete as far as conversion costs, it means that they still required 25% of conversion costs to be fully completed.

Therefore, the cost of ending work-in-process inventory can be calculated as:

Cost of 32,000 units = (75% x Cost of 200,000 units) / 200,000 units x 32,000 units

= (0.75 x Total cost of Assembly department) / 200,000 x 32,000

= ($960,000 / 200,000) x 32,000

= $1.92 x 32,000

= $61,440

Hence, the best answer choice is B, $292,000, which reflects the total cost of ending work-in-process inventory.

Chen Company Manufactures Keyboards in a Two-Department Process, Assembly and Finishing