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. 4,000 units of direct materials were added during the period at a cost of $8,200. 4,500 units were completed during the period, and 500 units were 40% completed at the end of the period. 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

The cost of the ending work in process is calculated using the FIFO method by considering the costs added during the period. The equivalent units for conversion costs are 200 (40% of 500 units). The total conversion cost is $33,210 ($28,700 labor + $4,510 overhead). The cost per equivalent unit for conversion is $7.38 ($33,210 / 4,500 units). The cost of ending WIP is $2,645 (500 units x $8.20 material cost + 200 equivalent units x $7.38 conversion cost).

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