Question

Jane Industries manufactures plastic toys. During​ October, Jane's Fabrication Department started work on 10,400 models. During the​ month, the company completed 11,400 model and transferred them to Distribution Department. The company ended the month with 1,500 models in ending inventory. There were 2,500 models in beginning inventory. All direct materials cost 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. models. Beginning work in process was 25% to conversion while ending work in process was 55% completed.

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?

​(Round intermediary calculations to the nearest​ cent.)

A. $10,200
B. $16,995
c. $7,629
D. $12,404

Answer 1

The amount of direct materials cost assigned to ending Work-in-process inventory at the end of October is $10,560.

Step-by-step explanation:

To determine the direct materials cost assigned to ending work-in-process inventory, we need to calculate the equivalent units of production for direct materials and the cost per equivalent unit. The equivalent units of production for direct materials is the sum of units completed and transferred out, and the units still in ending work-in-process inventory. In this case, the units completed and transferred out is 11,400, and the units in ending work-in-process inventory is 1,500. Therefore, the equivalent units of production is 11,400 + 1,500 = 12,900 units.

The total direct materials cost is the sum of the beginning direct materials cost, direct materials costs added during the accounting period, and the ending direct materials cost assigned to ending work-in-process inventory.

The beginning direct materials cost is given as $20,000, and the direct materials costs added during the accounting period is given as $70,700. To calculate the ending direct materials cost assigned to ending work-in-process inventory, we need to find the cost per equivalent unit for direct materials. This is calculated by dividing the total direct materials costs by the total equivalent units of production. In this case, the calculation is as follows:

Cost per equivalent unit = (Beginning direct materials cost + Direct materials costs added during the accounting period) / Equivalent units of production

= ($20,000 + $70,700) / 12,900

= $90,700 / 12,900

= $7.042 per unit

Finally, we can calculate the ending direct materials cost assigned to ending work-in-process inventory by multiplying the cost per equivalent unit by the units in ending work-in-process inventory:

Ending direct materials cost assigned to ending work-in-process inventory = Cost per equivalent unit * Units in ending work-in-process inventory

= $7.042 * 1,500

= $10,563

Therefore, the amount of direct materials cost assigned to ending work-in-process inventory at the end of October is $10,563. Rounded to the nearest cent, the answer is $10,560.

Answer 2

Option (a) is correct.

Step-by-step explanation:

Given that,

Direct materials costs = $70,700

Total units completed = 11,400

Beginning WIP units = 2,500

units in Ending WIP = 1,500

Units started and completed during the period:

= Total units completed - Beginning WIP units

= 11,400 - 2,500

= 8900 units

Equivalent unit of material:

= (Beginning WIP units × 0%) + (Units started and Completed × 100%) + (units in Ending WIP × 100%)

= (2,500 × 0%) + (8,900 × 100%) + (1,500 × 100%)

= 10,400 units

Material Cost per equivalent unit of Materials:

= Material cost added ÷ Equivalent unit of material

= $70,700 ÷ 10,400

= $6.80 per equivalent unit

Therefore,

Direct material cost assigned to ending work in process:

= Ending work in process × Material Cost per equivalent unit of Materials

= 1,500 × $6.80

= $10,200