Farmbeck, Inc. used direct materials of $500,000 and conversion costs of $535,500. Farmbeck started 100,000 units into production during the month, of which 92,000 units were completed. Units remaining in process at month-end were 100% complete with respect to direct materials but only 40% complete with respect to conversion costs. Using process costing, what would be the final balance in Farmbeck's Work in Process account at the end of the month?

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Business

Bailey Gentry

19 July, 01:08

Farmbeck, Inc. used direct materials of $500,000 and conversion costs of $535,500. Farmbeck started 100,000 units into production during the month, of which 92,000 units were completed. Units remaining in process at month-end were 100% complete with respect to direct materials but only 40% complete with respect to conversion costs. Using process costing, what would be the final balance in Farmbeck's Work in Process account at the end of the month?

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Johnathon · Answer 1

Farmbeck, Inc.

Ending Work in Process = $82,840

Explanation:

Calculations:

a) Finished Goods:

Materials $460,000

Conversion 492,660

Total costs $952,660

b) Work in Process Account

Direct materials $500,000 Finished Goods $952,660

Conversion costs 535,500 Balance c/d 82,840

1,035,500 1,035,500

Balance b/d 82,840

c) Work in process (WIP) can be described as partially finished goods awaiting completion. WIP refers to the raw materials and conversion costs (labor and overhead costs) incurred for products that are at various stages of the production process. WIP is a component of the inventory asset account on the balance sheet. The WIP costs are subsequently transferred to the finished goods account and eventually to the cost of goods sold.