Bentley Enterprises uses process costing to control costs in the manufacture of Dust Sensors for the mining industry. The following information pertains to operations for November. (CMA Exam adapted) Units Work in process, November 1st 16,300 Started in production during November 100,600 Work in process, November 30th 24,600 The beginning inventory was 60% complete as to materials and 20% complete as to conversion costs. The ending inventory was 90% complete as to materials and 40% complete as to conversion costs. Costs pertaining to November are as follows: Beginning inventory: direct materials, $55,160; direct labor, $20,620; manufacturing overhead, $15,540. Costs incurred during the month: direct materials, $470,970; direct labor, $190,740; manufacturing overhead, $399,080. What are the total costs in the ending Work-in-Process Inventory assuming Bentley uses first-in, first-out (FIFO) process costing

FIFO method is interested with Units worked on during the Production Period. Therefore make sure you begin by finishing Opening Work in Process Units.

1. Materials

To Finish Work in Process Inventory (16,300 x 40%) 6,520

Started and Completed (100,600 - 16,300) x 100 % 84,300

Ending Inventory (24,600 x 90%) 22,140

Equivalent units of Production 112,960

2. Conversion Cost

To Finish Work in Process Inventory (16,300 x 80%) 13,040

Started and Completed (100,600 - 16,300) x 100 % 84,300

Ending Inventory (24,600 x 40%) 9,840

Equivalent units of Production 107,180

Step 2 : Cost per equivalent unit

FIFO method is only interested in Costs incurred during the Production Period, therefore Cost in Beginning Inventory must be ignored as these were accounted for in previous year.

Cost per equivalent unit = Total Cost ÷ Total Equivalent Units

Materials = $470,970 ÷ 112,960 = $4.17

Conversion Costs = ($190,740 + $399,080) ÷ 107,180 = $5.50

Step 3 : Cost in the ending Work-in-Process Inventory

Work-in-Process Inventory = Material Cost + Conversion Cost

= 22,140 x $4.17 + 9,840 x $5.50

= $146,443.80

Conclusion :

The total costs in the ending Work-in-Process Inventory assuming Bentley uses first-in, first-out (FIFO) process costing is $146,443.80