Question

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10.200 models. During the month, the company completed 11.200 models, and transferred them to the Distribution Department. The company ended the month with 2500 models in ending inventory. There were 3500 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 55% complete as to conversion costs. Beginning inventory: Direct materials costs $20,200 $11,700 Conversion costs Manufacturing costs added during the accounting period: Direct materials costs $70,600 Conversion costs $240,600 What is the cost assigned to ending inventory during October? (Round intermediary calculations to the nearest cent.) OA $46,010 OB. $53,705 $58,971 Op $40,918

Answer 1

	Direct materials	Conversion costs
To complete beginning inventory	0	2450	=3500*(1-30%)
Units started and completed	7700	7700	=11200-3500
Ending work in process inventory	2500	1375	=2500*55%
Equivalent units	10200	11525
	Direct materials	Conversion costs
Manufacturing costs added during month	70600	240600
Divide by Equivalent units	10200	11525
Cost per Equivalent unit	6.92	20.88
	Direct materials	Conversion costs	Total
Ending work in process inventory units	2500	1375
X Cost per Equivalent unit	6.92	20.88
Ending work in process inventory cost	17300	28710	46010
Option A $46,010 is correct