Question

XYZ Company reported the following information for the year 2020: Beginning raw materials inventory$37,000Beginning work in process inventory62,200 Beginning finished goods inventory58,300Cost of materials purchased151,000 Cost of direct materials requisitioned91,300Direct labor incurred135,000 Actual manufacturing overhead160,000Cost of goods manufactured287,000 Cost of goods sold265,000Manufacturing overhead rate (% of direct labor)125% What is the ending work in process inventory balance

Answer 1

Ending WIP = $18,375

Step-by-step explanation:

The computation of the ending work in process inventory is shown below:

But before that first determine the manufacturing cost which is

Manufacturing cost incurred = Direct material used + Direct labor + Manufacturing overhead applied

= $91,300 + $135,000 + ($135,000 × 125%)

= $243,175

Now as we know that

Cost of goods manufactured = Beginning WIP + Manufacturing cost incurred during the period - Ending WIP

$287,000= $62,200 + $243,175 - Ending WIP

So,

Ending WIP = $18,375