Kirkpatrick Company uses a process-cost system with the FIFO method of accounting for beginning inventories. Materials are added at the beginning of the process, and conversion costs are incurred uniformly. Work-in-process at the beginning is assumed to be 40 percent complete and at the end to be 70 percent complete. Additional data follow:

-The total cost of the units still in process is
A) $52,080.
B) $58,800.
C) $41,160.
D) $49,160.

Question

Kirkpatrick Company uses a process-cost system with the FIFO method of accounting for beginning inventories. Materials are added at the beginning of the process, and conversion costs are incurred uniformly. Work-in-process at the beginning is assumed to be 40 percent complete and at the end to be 70 percent complete. Additional data follow:
 
-The total cost of the units still in process is
A) $52,080. 
B) $58,800. 
C) $41,160. 
D) $49,160.

Quizplus · Accepted Answer

To calculate the total cost of units still in process, we need to find the equivalent units of production for materials and conversion costs separately and then find their respective total costs.

Equivalent units of production for Materials: 
Beginning WIP (40% complete) = 8,000 units x 40% = 3,200 
Started and completed = 17,000 units 
Ending WIP (70% complete) = 3,000 units x 70% = 2,100 
Total equivalent units of production for materials =3,200 + 17,000 + 2,100 = 22,300

Equivalent units of production for Conversion costs: 
Beginning WIP (40% complete) = 8,000 units x 40% = 3,200 
Started and completed = 17,000 units 
Ending WIP (70% complete) = 3,000 units x 70% = 2,100 
Total equivalent units of production for conversion costs =3,200 + 17,000 + 2,100 = 22,300

Total cost for materials = $306,540 
Total cost for conversion costs = $176,400 
Total cost of units still in process = (3,000 units x 70% complete) x ($306,540 + $176,400) / 22,300 = $41,160

Kirkpatrick Company Uses a Process-Cost System with the FIFO Method