Home › US CMA Part 1 › Management Accounting › Budgeting › Work in process on January 1 is 450 bicycle helm…
Work in process on January 1 is 450 bicycle helmets valued at $15 each and 520 ski helmets valued at $70 each. What is total beginning work in process?
A$6,750
B$36,400
C$26,100
D$43,150
Answer & Solution
Correct answer: D. $43,150
1. Each product line is valued at its own unit cost before the two are combined.
2. Bicycle helmets give 450 units times $15, which is $6,750.
3. Ski helmets give 520 units times $70, which is $36,400.
4. Total beginning work in process is $6,750 plus $36,400, which is $43,150.
5. That single figure is what appears on the cost of goods sold budget.
6. $6,750 and $36,400 are the two components, so each alone understates the opening balance.
7. $26,100 is the closing work in process, valued at the different December 31 unit costs.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 7.7 Cost of Goods Sold Budget_
Related questions
How should budget figures be understood once the period they cover has ended?A capital expenditures budget for 2021 lists cutting machinery $18,000, assembly machineryWhat does a capital expenditure budget list?January estimated cash receipts are $118,000, including $50,000 from issuing stock, and esMarch cash payments are $18,600 for cash purchases, $26,040 for March purchases on accountA company pays 30% of purchases in cash and 60% of purchases on account in the month of puIn March a company collects $24,800 of cash sales, $39,680 from March sales on account, $3January sales are $68,000, of which 20% are for cash and the rest on account, and 40% of s