Process Costing Practice Problems \& Solutions (Solutions are at the bottom) Purpose: - Assign manufacturing costs to work-in-process and finished goods inventory - Calculate Cost of Goods Sold for the period - Differentiate between full manufacturing cost (the cost allocated to each unit under process costing) and the incremental cost of producing another unit Problem 1: Calculate inventory costs when materials/conversion costs are completed at the same rate A company produces water bottles and uses process costing to assign manufacturing costs to products. There is only one processing department, so that the cost of completed units goes to finished goods inventory. Units in process at the end of June were 20% complete with respect to both materials and conversion costs. Units in process at the beginning of June were 10% complete with respect to both materials and conversion costs. Required: a. How much cost should be assigned to (i) Ending WIP inventory and (ii) Inventory that was finished during June? b. You sell 87,000 water bottles during June. There were 4,000 bottles in beginning Finished Goods Inventory on June 1 with an assigned product cost of $5.20 each. If the company uses FIFO to value Finished Goods Inventory, what will Cost of Goods Sold be for June? C. What is your best estimate of the incremental cash cost of producing one water bottle? (Your answer can be a range, e.g., "between $4 and $9.)