Question

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,400 models. During the month, the company completed 11,200 models, and transferred them to the Distribution Department. The company ended the month with 2200 models in ending inventory. There were 3000 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 $20,000
Conversion costs $11,100

Manufacturing costs added during the accounting period​:

Direct materials costs $70,700
Conversion costs $240,500

What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of October?


a. $19,783
b. $20,337
c. $10,923
d. $14,916

Answer 1

d. $14,916

Step-by-step explanation:

Note that Jane Industries uses FIFO method of process costing.

Step 1 : Equivalent Units in respect of materials

Materials = 3,000 x 0 % + 8,200 x 100% + 2,200 x 100%

= 10,400 units

Step 2 : Cost per Equivalent unit in respect of materials

Cost per Equivalent = $70,700 ÷ 10,400 units

= $6.80

Step 3 : direct materials cost assigned to ending work-in-process

Ending work-in-process (Materials Cost) = 2,200 x $6.80

= $14,960