Question

The Richmond Corporation uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on August 31 consisted of 21,400 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for August was $3.60 for materials and $5.10 for labor and overhead, the total cost assigned to the ending work in process inventory was:

Multiple Choice

• $186,180

• $111,708

• $120,696

• $142,524

Answer 1

Closing work in process = 21,400 units.

Percentage of material completed = 100 %.

Therefore, equivalent production units for material will be,

= 21,400 x 100%

=21,400 units.

Percentage of completion of labour and overhead = 60%.

Therefore, equivalent production units for labour and overhead will be,

21,400 x 60%

= 12,840 units.

We are given that,

Cost per equivalent units for material = $3.60.

Cost per equivalent units for labour and overhead = $5.10.

Value of closing work in process:

Materials = 21,400 units x $3.60

Material = $ 77,040.

Labour and overhead = 12,840 units x $5.10

Labour and overhead = $65,484.

So we completed distribution of cost to material and labour and overhead.

Now, total cost will be the sum of these value of material and labour and overhead.

Total cost of ending work in process will be,

Total cost = 77,040 + 65,484

Total cost of ending work in process = $142,524.

Hence, Option D is the correct answer.

SUMMARY:

Ending work in process consists of 100 % completion of material and 60% completion of labour and overhead. Total units in ending work in process is 21,400 units. So first we need to find equivalent production units for these materials and labour and overhead. We found that 21,400 units for material and 12,840 units for labour and overhead as equivalent production units. Now we need to distribute cost to each of these two. We will get $77,040 for material by multiplying equivalent production unit for material and cost of material. Also, $65,484 is the cost of labour and overhead.

Total cost will be $142,524.

Hence, Option D is the correct answer.