Question

Orange Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 300 units. The costs and percentage completion of these units in beginning inventory were:

		Cost	Percent Complete
	Materials costs………………	$3,100	70%
	Conversion costs.................	$2,900	50%

A total of 8,500 units were started and 8,100 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

	Materials costs......................	$110,500
	Conversion costs..................	$153,900

The ending inventory was 90% complete with respect to materials and 55% complete with respect to conversion costs.

The cost of ending work in process inventory in the first processing department according to the company's cost system is closest to:

Answer 1

a. Calculation of Equivalent units: Particulars Physical units % Units completed and transferred Ending Inventory(300+8500-8100) Total 8100 700 8800 Materials Conversion Units % Units 100% 8100 100% 8100 90% 630 55% 385 8730 8485 b. Calculation of cost assigned Cost Equivalent units Equivalent unit per cost Materials Conversion $ 1,13,600.00 $1,56,800.00 8730 8485 $ 13.01 $ 18.48 c. Ending Inventory Materials Conversion Cost $ $ $ 8,190.00 630*13.01 7,122.50 385*18.48 15,312.50