Question

Beeper’s Boaster Juice blends high-protein smoothies and packages them for sale in major grocery stores. It uses a mix of natural ingredients and vitamins to differentiate itself from its competitors.

The company uses a weighted average process costing system to cost its products in two departments: blending and packaging. Direct ingredients are added at the beginning of the process in each department and conversion costs are incurred evenly throughout the process.

The following production and cost data are available for the month of February: Work-in-process (units), beginning		80,000
Units started		256,000
Work-in-process (units), ending		48,000
Direct materials		Conversion
Beginning inventory costs	$ 250,200		$ 379,840
Costs added	$1,362,600		$1,545,920

At the beginning of the period the work-in-process was 40% complete. It was 80% complete at the end of the period.

What is the amount of conversion cost assigned to the February ending work-in-process? (Round the final answer to the nearest dollar.)

1. $197,514
2. $226,560
3. $230,400
4. $456,960

Answer 1

Solution:

Beeper’s Boaster Juice Computation of Equivalent units
Particulars	Physical Units	Equivalent units
		Material	Conversion
Work in Process, beginning	80000
Started during the current period	256000
Total units to account for	336000
Units accounted for:
Unit completed & Transferred out	288000	288000	288000
Closing WIP:	48000
Material (100%)		48000
Conversion (80%)			38400
Equivalent units of production	336000	336000	326400

Beeper’s Boaster Juice Computation of Cost per equivalent unit of Production
Particulars	Material	Conversion
Opening WIP	$250,200.00	$379,840.00
Cost Added during Period	$1,362,600.00	$1,545,920.00
Total cost to be accounted for	$1,612,800.00	$1,925,760.00
Equivalent units of production	336000	326400
Cost per Equivalent unit	$4.80	$5.90

amount of conversion cost assigned to the February ending work-in-process = Equivalent units of conversion in ending WIP * Cost per equivalent unit of conversion

= 38400 * $5.90 = $226,560

hence option b is correct.