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General Fabricators assembles its product in two departments. It has two departments that process all units:...

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Accounting

General Fabricators assembles its product in two departments. Ithas two departments that process all units: Cutting and Finishing.During October, Cutting department allocated a total cost of$75,000 to units that were finished in the cutting process andtransferred to the finishing process.

In October, beginning work in process in the finishingdepartment was 75% complete as to conversion. Direct materials areadded at the end of the finishing process. Conversion costs areadded evenly in the finishing process. Beginning inventories infinishing department included $9,000 for transferred-in costs and$20,000 for conversion costs. Ending inventory in finishingdepartment was 30% complete. Additional information about thedepartments in October follows:

Finishing

Beginning WIP units

20,000

Units started this period

50,000

Units transferred this period

50,000

Ending WIP units

20,000

Materials costs added

$28,000

Direct Manufacturing Labor added

$40,000

Other Conversion costs added

$24,000

Required:

1. Determine a) the amount of ending WIP, b) the amount oftransferred- out cost (credit amount), usingWeightedAveragefor the finishing department.

Answer & Explanation Solved by verified expert
3.8 Ratings (413 Votes)

Cost of ending inventory= $33,000

Cost of goods transferred= $163,000

Working

Statement of Equivalent Units
Transferred in Material Conversion
Units Complete % Equivalent units Complete % Equivalent units Complete % Equivalent units
Transferred                    50,000 100%                   50,000 100%            50,000 100%            50,000
Closing WIP                    20,000 100%                   20,000 0%                      -   30%              6,000
Total                    70,000 Total                   70,000 Total            50,000 Total            56,000
Cost per Equivalent Units
COST Transferred in Material Conversion TOTAL
Beginning WIP Inventory Cost $ 9,000 $ 0 $ 20,000 $ 29,000
Cost incurred during period $ 75,000 $ 28,000 $ 64,000 $ 167,000
Total Cost to be accounted for $ 84,000 $ 28,000 $ 84,000 $ 196,000
Total Equivalent Units                    70,000                   50,000                   56,000
Cost per Equivalent Units $                    1.20 $                    0.56 $                   1.50 $                       3.26
Statement of cost
Equivalent Cost/unit Ending WIP Transferred
Units Cost Allocated Units Cost Allocated
Transferred in $                    1.20                   20,000 $ 24,000                       50,000 $ 60,000
Material $                    0.56                             -   $ 0                       50,000 $ 28,000
Conversion $                    1.50                      6,000 $ 9,000                       50,000 $ 75,000
TOTAL $ 196,000 TOTAL $ 33,000 TOTAL $ 163,000

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