CIMA BA2 · Chapter 5 · Question 8 of 10
A process has no opening work in progress. During the period 9,000 units were started, of which 7,400 were completed. The 1,600 units in closing work in progress were 100% complete as to materials and 35% complete as to conversion costs. Material costs were $72,000 and conversion costs were $55,720. What is the value of the closing work in progress?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $16,720
Explanation
Equivalent units: materials = 7,400 + 1,600 = 9,000; conversion = 7,400 + (1,600 x 35%) = 7,400 + 560 = 7,960. Materials: $72,000 / 9,000 = $8.00 per unit. Conversion: $55,720 / 7,960 = $7.00 per unit. Closing WIP = (1,600 x $8.00) + (560 x $7.00) = $12,800 + $3,920 = $16,720.
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