Cherrington Company uses a process costing system. For May, the month just completed, the beginning work in process inventory consisted of 50,000 units which were 60% complete with respect to conversion costs. The ending inventory for the month was 20% complete with respect to conversion costs. A summary of cost data for the month follows:

-Using the FIFO method, the total cost of units in the ending work in process inventory is closest to:
A) $153,200
B) $154,800
C) $155,300
D) $157,000

Question

Cherrington Company uses a process costing system. For May, the month just completed, the beginning work in process inventory consisted of 50,000 units which were 60% complete with respect to conversion costs. The ending inventory for the month was 20% complete with respect to conversion costs. A summary of cost data for the month follows:

-Using the FIFO method, the total cost of units in the ending work in process inventory is closest to:

-Using the FIFO method, the total cost of units in the ending work in process inventory is closest to:
A) $153,200 
B) $154,800 
C) $155,300 
D) $157,000

Quizplus · Accepted Answer

The FIFO method calculates the cost of ending work in process inventory based on the costs of the most recent units added. The total cost of $153,200 is closest to the calculated cost using this method.

Cherrington Company Uses a Process Costing System