Question
Saline Solutions uses process costing to account for production of its unique compound BG at its River Plant. The River Plant has two departments: R
Saline Solutions uses process costing to account for production of its unique compound BG at its River Plant. The River Plant has two departments: R and S. Raw materials are added at two points in the production of BG. First, rubber pellets are added at the beginning of production in Department R. Next, a liquid thinner is added in Department R when the product is 60% complete with respect to conversion costs. Once the basic compound is completed in Department R, it is transferred to Department S for mixing and packaging. The following information is available from the River Plant for May. (No new material is added in Department S.)
Department S Production and Costs: May
Beginning inventory (62,000 units, 40% complete with respect to Department S costs) | |||
Total cost (Department R and Department S) cost: Beginning inventory | $ | 498,684 | |
Current work (550,000 units started) | |||
Department R costs | $ | 3,467,600 | |
Department S costs | 1,340,596 | ||
Department R uses FIFO process costing to account for production. In January, beginning work-in-process inventory consisted of 62,000 units, 80 percent complete with respect to conversion. The cost of rubber pellets put in production in January was $2,470,000. The cost of thinner introduced into production in January was $2,223,000. Reported costs per equivalent unit for January were $8.50 per equivalent unit of rubber pellets and $7.65 per equivalent unit for thinner.
Required:
Based on the information available, the ending work-in-process inventory in January was:
Multiple Choice
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There is not enough information to determine the degree of completion.
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Less than 60 percent complete with respect to conversion cost.
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At least 60 percent complete with respect to conversion cost.
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Exactly 60 percent complete with respect to conversion cost.
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