Use the information below to answer the following question(s).Canadian Oil Company manufactures cooking oils.All direct materials are added at the beginning of the production process.The company currently uses the FIFO method.Data for the month of July is listed below.
-What is the amount of direct materials assigned to ending work-in-process?
A)$63,000
B)$42,000
C)$36,600
D)$21,050
E)$17,000

Question

Use the information below to answer the following question(s).Canadian Oil Company manufactures cooking oils.All direct materials are added at the beginning of the production process.The company currently uses the FIFO method.Data for the month of July is listed below. 
-What is the amount of direct materials assigned to ending work-in-process?
A)$63,000 
B)$42,000 
C)$36,600 
D)$21,050 
E)$17,000

Quizplus · Accepted Answer

Using the FIFO method, we assume that the first units to enter production are the first ones to be completed. Therefore, the direct materials assigned to ending work-in-process should reflect the cost of the materials used in the newest units (those started in July). To find this amount, we need to calculate the cost of the direct materials used in units completed during July and subtract this amount from the total cost of direct materials purchased in July.

Cost of direct materials used in July: 18,000 + 21,600 + 21,600 + 9,000 = $70,200
Total direct materials purchased in July: 70,200 + 10,800 = $81,000
Direct materials assigned to ending work-in-process: 81,000 - 44,400 = $36,600

Therefore, the answer is (C) $36,600.

Use the Information Below to Answer the Following Question(s)