Question

A company completes 21,000 units this month and has ending work in process inventory of 3,000 units which are estimated to be 40% complete. Total production costs are $666,000. The cost of ending Work in Process Inventory is $

Answer 1

Units completed = 21,000

Ending work in process = 3,000 units

Degree of completion of work in process = 40%

Equivalent units of work in process = Ending work in process x Degree of completion of work in process

= 3,000 x 40%

= 1,200

Total equivalent units of production = Units completed + Equivalent units of work in process

= 21,000+12,00

= 22,200 units

Total production costs = $666,000

Cost per equivalent unit = Total production costs / Total equivalent units of production

= 666,000/22,200

= $30

Cost of ending work in process = Equivalent units of work in process x Cost per equivalent unit

= 1,200 x 30

= $36,000

Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.

Thanks!!!