Williams Company computed its cost per equivalent unit for direct materials to b

Question

Williams Company computed its cost per equivalent unit for direct materials to be $2.60 and its cost per equivalent unit for conversion to be $3.75. A total of 250,000 units of product were completed and transferred out as finished goods during the month, and 36,000 of equivalent units remained unfinished at the end of the month.

1-The amount that should be reported in ending Work in Process Inventory is?

2-The amount that should be reported in Finished Goods Inventory is?

A- $650,000.

B- $135,000.

C- $1,816,100.

D- $1,587,500.

E- $228,600.

Explanation / Answer

1) In absense of information as to the percenateg of completion for the ending work in process inventory we assume that the equivalent units of ending WIP inventory is same with respect to material as well as conversion cost.

The amount that should be reported in ending work in process inventory

= cost of material + conversion cost

= 36000 x $2.60 + 36000 x 3.75

= $ 228600

2)

The units completed and transferred during the process ate 100% complete with respect to both material and conversion cost.

The amount that should be reported in Finished Goods Inventory = 250000 x ($2.60+$3.75) = $1587500

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