Department A had 1,000 units in Work in Process that were 60% completed at the beginning of the period at a cost of $7,000. During the period, 4,000 units of direct materials were added at a cost of $8,200 and 4,500 units were completed. At the end of the period, 500 units were 40% completed. All materials are added at the beginning of the process. Direct labor was $28,700, and factory overhead was $4,510. The cost of the 500 units in process at the end of the period if the first-in, first-out method is used to cost inventories was
A) $3,240
B) $5,175
C) $2,569
D) $2,645

Question

Quizplus · Accepted Answer

Under the FIFO method, the cost of ending work in process is calculated based on the costs incurred during the current period. The equivalent units for conversion costs for the ending inventory are 200 (500 units * 40%). The cost per equivalent unit for conversion costs is calculated by dividing the total conversion costs ($28,700 + $4,510) by the equivalent units of production. The cost of ending inventory is then the sum of the cost of materials (500 units * $2.05) and the conversion costs (200 units * conversion cost per equivalent unit).

Department a Had 1,000 Units in Work in Process That