Department A had 1,000 units in Work in Process that were 60% completed at the beginning of the period at a cost of $7,000. During the period, 4,000 units of direct materials were added at a cost of $8,200, and 4,500 units were completed. At the end of the period, 500 units were 40% completed. All materials are added at the beginning of the process. Direct labor was $28,700 and factory overhead was $4,510. The cost of the 500 units in process at the end of the period if the first-in, first-out method is used to cost inventories was:

Question

Business

Guillermo Hull

30 August, 03:28

Department A had 1,000 units in Work in Process that were 60% completed at the beginning of the period at a cost of $7,000. During the period, 4,000 units of direct materials were added at a cost of $8,200, and 4,500 units were completed. At the end of the period, 500 units were 40% completed. All materials are added at the beginning of the process. Direct labor was $28,700 and factory overhead was $4,510. The cost of the 500 units in process at the end of the period if the first-in, first-out method is used to cost inventories was:

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Answers (1)

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Mustache · Answer 1

The cost at the end of process = $2,645

Explanation:

As per the data given in the question,

Direct material Conversion cost

Particulars I/P Particulars O/P % Units % Units

Opening WIP 1,000 Units completed 1,000 0% 0 40% 400

Units introduced 4,000 units completed 3,500 100% 3,500 100% 3,500

Closing WIP 500 100% 500 40% 200

Total 4,000 4,100

The I/P = Input

O/P = Output

Particulars Cost Equivalent unis Cost per unit

Direct material $8,200 4,000 $2.05 ($8,200 : 4,000)

Conversion costs $33,210 4,100 $8.10 ($33,210 : 4,100)

(Conversion cost = 28,700 + 4,510 = 33,210)

Particulars Units completed Closing WIP

Direct material $14,175 $1,025

(500 units * $2.05)

Conversion costs $28,350 $1,620 (3,500 units * $8.10) (200 units * $8.10)

Total $42,525 $2,645

(Direct material Units completed = 3,500*2.05+7,000 = 14,175)