The Gasson Company uses the weighted-average method in its process costing system.The company's ending work in process inventory consists of 10,000 units,100% complete with respect to materials and 70% complete with respect to labor and overhead.If the costs per equivalent unit are $4.50 for the materials and $2.00 for labor and overhead,the balance of the ending work in process inventory account would be:
A)$44,500
B)$50,500
C)$59,000
D)$65,000

Question

Quizplus · Accepted Answer

Total equivalent units for the materials: 
= Units in ending WIP inventory * % complete + Units transferred out 
= 10,000 * 100% + (100,000 - 10,000) = 1,090,000

Total equivalent units for labor and overhead: 
= Units in ending WIP inventory * % complete + Units transferred out * % complete 
= 10,000 * 70% + (100,000 - 10,000) * 100% = 83,000

Total cost for materials: 
= Total equivalent units * Cost per equivalent unit 
= 1,090,000 * $4.50 = $4,905,000

Total cost for labor and overhead: 
= Total equivalent units * Cost per equivalent unit 
= 83,000 * $2.00 = $166,000

Total cost of ending WIP inventory: 
= Cost of materials + Cost of labor and overhead 
= $4,905,000 + $166,000 = $5,071,000

Balance of ending WIP inventory account: 
= (Cost of materials + Cost of labor and overhead) - (Units in ending WIP inventory * Cost per equivalent unit) 
= $5,071,000 - (10,000 * ($4.50 + $2.00)) = $59,000

The Gasson Company Uses the Weighted-Average Method in Its Process