The cost of goods for ABC company flow through an assembly and a finishing depar

ID: 2430962 • Letter: T

Question

The cost of goods for ABC company flow through an assembly and a finishing department before being transferred to Finished Goods Inventory. The Work in Process accounts in the assembly and finishing departments had beginning balances of $5,000 and $4,000, respectively. During the period, the following costs were added to each department:

Direct Materials: Assembly $12,000, Finishing $15,000

Direct Labor: Assembly $24,000, Finishing $46,000

Overhead: Assembly $16,000, Finishing $22,000

Also, $47,000 of cost was transferred from the assembly department to the finishing department. Finally, the ending balance in the Work in Process account in the finishing department was $6,000. Based on this information, the cost of goods transferred to the Finished Goods Inventory account was:

a) $81,000

b) $134,000

c) $140,000

d) $128,000

Explanation / Answer

Answer

Cost t/f from Assembly department to Finishing Department

$ 47,000.00

Finishing Department:

Beginning WIP Cost

$ 4,000.00

Direct Material

$ 15,000.00

Direct Labor

$ 46,000.00

Overhead

$ 22,000.00

Total of all above costs

$ 134,000.00

Less: Ending WIP in finishing department cost

$ 6,000.00

Cost of Goods t/f to Finished Goods Inventory

$ 128,000.00