Question

Bentley Enterprises uses process costing to control costs in the manufacture of Dust Sensors for the mining industry. The following information pertains to operations for November. (CMA Exam adapted)

Units

Work in process, November 1^st

16,000

Started in production during November

100,000

Work in process, November 30^th

24,000

The beginning inventory was 60% complete as to materials and 20% complete as to conversion costs. The ending inventory was 90% complete as to materials and 40% complete as to conversion costs.

Costs pertaining to November are as follows:

Beginning inventory: direct materials, $54,560; direct labor, $20,320; manufacturing overhead, $15,240.

Costs incurred during the month: direct materials, $468,000; direct labor, $182,880; manufacturing overhead, $391,160.

What are the total costs transferred out for work-in-process inventory assuming Bentley uses first in first costing?

a.$978,624

b.$1,042,040

c.$90,120

d.$650,880

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units				16,000
Add: Units Started in Process				100,000
Total Units to account for:				116,000
UNITS TO BE ACCOUNTED FOR:
Units completed from Beginning WIP				16000
Units started and completed				76,000
Ending Work in Process				24,000
Total Units to be accounted for:				116,000
Equivalent Units:
			Material Cost		Conversion
			% Completion	Units	% Completion	Units
Units completed from Beg. WIP			40%	6,400	80%	12,800
Units started and completed			100%	76,000	100%	76,000
Ending Work in Process			90%	21,600	40%	9,600
Total Equivalent units				104,000		98,400
COST PER EQUIVALENT UNIT:
			Material		Conversion
Total cost added during the year			468,000		574,040
Equivalent Units			104,000		98,400
Cost per Equivalent unit			4.5		5.83
TOTAL COST ACCOUNTED FOR:
Units Completed from Beginning WIP (16000 units)
			Equivalent unit	Cost per EU	Total Cost
Beginning Cost					90120
Material			6,400	4.5	28800
Conversion Cost			12,800	5.83	74624
Cost of units completed from Beg WIP					193544
Units started and Transferred out (76000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			76,000	4.5	342000
Conversion Cost			76,000	5.83	443080
Total Cost of UnitsStarted and completed					785080
Cost of units completed					978624
Answer is A. 978,624