Van Goe produces paints. On January 1, it had no work-in-process inventory. It s

Question

Van Goe produces paints. On January 1, it had no work-in-process inventory. It starts production of 300,000 gallons of paint in January and completes 240,000 gallons. The costs of the resources used by Van Goe in January consist of the following: The production supervisor estimates that the ending work in process is 80 percent complete. Compute the cost of paint transferred to finished goods and the amount in work-in-process ending inventory as of January 31. (Do not round intermediate calculations.)

Explanation / Answer

Cost of paint transferred to finished goods = $624,000

Work-in-process ending inventory = $124,800

Explanation:

Transferred to

Finished Goods

Work in process

january 31

Cost of equivalent gallon= $2.60 = $748,800 ÷ 288,000 equivalent units.

transferred to finished goods = 240,000 equivalent units × $2.60= $624,000

Work-in-process ending inventory = 48,000 equivalent units × $2.60= $124,800

Total

Transferred to

Finished Goods

Work in process

january 31

Production Gallons 300,000 240,000 60,000 Percentage complete 100% 80% Equivalent gallons 288,000 240,000 48,000 Costs Materials $328,800 Conversion costs $420,000 Total cost incurred $748,800 Cost per equivalent gallon $2.60 Cost assigned to product $748,800 $624,000 $124,800

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