The following events took place at a manufacturing company for the current year: (1) Purchased $95,000 in direct materials. (2) Incurred labor costs as follows: (a) direct, $56,000 and (b) indirect, $13,600. (3) Other manufacturing overhead was $107,000, excluding indirect labor. (4) Transferred 80% of the materials to the manufacturing assembly line. (5) Completed 65% of the Work-in-Process during the year. (6) Sold 85% of the completed goods. (7) There were no beginning inventories. What is the value of the ending Work-in-Process Inventory? a. $95,060.50. b. $13,261.50. c. $14,259.00. d. $88,410.00.

D $88410

Explanation:

Work in progress includes all the raw materials, direct labour and conversion costs incurred so far excluding cost of goods sold.

WIP = Intial WIP + Manufacturing costs incurred - Cost of goods sold.

The WIP inventory at the begining of the period is given as nil.

WIP during the period = (95000*80%) + 56000+13600+107000

=252600 (but it was given that 65% of the Process was completedi. e., finished goodswhich are not the part of the WIP inventory; hence the remaining 35% is the Work in process inventory)

=$ 88410.

Further the remaining raw material 20% = 95000*20% shall not comprise a part of the WIP as it has not been brought into process itself, it shall lie in raw materials inventory itself. It shall be counted into the WIP once it is brought into the manufacturing assembly line.

the value of the ending Work-in-Process Inventory is d. $88,410.00.

Explanation:

Materials utilized in Production Process

Materials Cost=$95,000*80%

= $76,000

Cost of Goods Manufactured Schedule

Direct Materials $76,000

Direct Labor $56,000

Indirect Labor $13,600

Other manufacturing overhead $107,000

Total Manufacturing Costs $252,600

Completed = 65%

Incomplete = 35%

Opening Work In Process Inventory = Nill

Therefore, ending Work-in-Process Inventory = $252,600 * 35%

= $88,410