1. Information for the current month for Process D is shown below. Direct materials are added at
the beginning of the process. Beginning work in process is 50 percent complete as to conversion
costs; ending work in process inventory is 40 percent complete. Determine the cost of ending
work in process inventory. a. $7,040 b. $5,120 c. $3200 d. $3,760
Solution
(a) Ending WIP = 5,000 units, 40% complete = 2,000 equivalent units
(b) Material cost per equivalent unit = $(6,400 + 31,740) / 79,000 = $0.48
(c) Conversion cost per equivalent unit = $(9,600 + 51,100) / 70,000 = $0.87
(d) Total cost per unit = $(0.48 + 0.87) = $1.35
(d) Value of closing WIP
(i) Materials = $0.48 x 2,000 units = $960
(ii) Conversion = $0.87 x 2,000 units = $1,740
(iii) Total value of ending WIP = $(960 + 1,740) = $2,700