Data concerning a recent period’s activity in the Prep Department, the first processing department in a company that uses process costing, appear below:

 	Materials	Conversion
Equivalent units in ending work in process inventory	2,060	910
Cost per equivalent unit	$ 13.86	$ 4.93
A total of 21,500 units were completed and transferred to the next processing department during the period.

Required:
Compute the cost of ending work in process inventory for materials, conversion, and in total.
Compute the cost of the units completed and transferred out for materials, conversion, and in total.
Note: For all requirements, round your final answers to the nearest whole dollar amount.



We can break this down into two parts to calculate the cost of ending work in process (WIP) inventory and the cost of units completed and transferred out.

### 1. **Cost of Ending Work in Process (WIP) Inventory**

The formula for the cost of ending work in process inventory is:

\[
\text{Cost of Ending WIP Inventory} = \text{Equivalent Units in Ending WIP} \times \text{Cost per Equivalent Unit}
\]

#### For Materials:
\[
\text{Cost of Ending WIP (Materials)} = 2,060 \times 13.86 = 28,611.60
\]

#### For Conversion:
\[
\text{Cost of Ending WIP (Conversion)} = 910 \times 4.93 = 4,486.30
\]

#### Total Cost of Ending WIP:
\[
\text{Total Cost of Ending WIP} = 28,611.60 + 4,486.30 = 33,097.90
\]

Rounding to the nearest dollar:
- Cost of Ending WIP for Materials: **$28,612**
- Cost of Ending WIP for Conversion: **$4,486**
- Total Cost of Ending WIP: **$33,098**

---

### 2. **Cost of Units Completed and Transferred Out**

The formula for the cost of units completed and transferred out is:

\[
\text{Cost of Units Completed and Transferred Out} = \text{Units Completed and Transferred Out} \times \text{Cost per Equivalent Unit}
\]

Given that **21,500** units were completed and transferred:

#### For Materials:
\[
\text{Cost of Units Transferred Out (Materials)} = 21,500 \times 13.86 = 297,990
\]

#### For Conversion:
\[
\text{Cost of Units Transferred Out (Conversion)} = 21,500 \times 4.93 = 105,995
\]

#### Total Cost of Units Transferred Out:
\[
\text{Total Cost of Units Transferred Out} = 297,990 + 105,995 = 403,985
\]

Rounding to the nearest dollar:
- Cost of Units Transferred Out for Materials: **$297,990**
- Cost of Units Transferred Out for Conversion: **$105,995**
- Total Cost of Units Transferred Out: **$403,985**

---

### Final Summary:
1. **Cost of Ending Work in Process Inventory:**
   - Materials: **$28,612**
   - Conversion: **$4,486**
   - Total: **$33,098**
   
2. **Cost of Units Completed and Transferred Out:**
   - Materials: **$297,990**
   - Conversion: **$105,995**
   - Total: **$403,985**

---

Would you like more details on any of these calculations, or have any questions?

Here are five related questions for further exploration:
1. How do you calculate equivalent units in process costing?
2. What is the difference between direct materials and conversion costs?
3. How does the weighted-average method differ from the FIFO method in process costing?
4. What factors could cause an increase in the cost per equivalent unit?
5. How does ending work in process affect financial statements?

**Tip:** Always check if the rounding of costs affects final totals, especially when dealing with large unit volumes.

Data concerning a recent period’s activity in the Prep Department, the first processing department in a company that uses process costing, appear below:

Materials: Equivalent units in ending work in process inventory 2,060, Cost per equivalent unit $13.86
Conversion: Equivalent units in ending work in process inventory 910, Cost per equivalent unit $4.93
A total of 21,500 units were completed and transferred to the next processing department during the period.

Required: Compute the cost of ending work in process inventory for materials, conversion, and in total. Compute the cost of the units completed and transferred out for materials, conversion, and in total.

Learn how to calculate the costs of ending work in process (WIP) inventory and units completed and transferred out using process costing. This detailed example covers equivalent units, cost per equivalent unit, and the total cost calculation for materials and conversion costs. Suitable for college-level accounting and finance students.

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