Department G had 3,600 units 25% completed at the beginning of the period, 11,00

Question

Department G had 3,600 units 25% completed at the beginning of the period, 11,000 units were completed during the period, 3,000 units were one-fifth completed at the end of the period, and the following manufacturing cost were debited to the departmental work in process account during the period:

Work in process, beginning of period   $40,000

Cost added during period:

Direct Materials (10,400 at $8)    83,200

Direct Labor                                  63,000

Factory Overhead                         25,000

Assuming all the direct materials are placed in process at the beginning of production and that the first in first out method of inventory costing is used, what is the total cost of the units " started and completed" during the period ( round unit cost calculations to four decimal places)?

A. $120,000

B. $190,275

C.$211,200

D.$20,934

Explain how you got the answer please

Explanation / Answer

Answer:

Total Units Started and Completed during the period = 3,600 + 10,400 - 80% of 3,000 units = 11,600 Units (started and completed during the period.

Total Cost of Units started and completed during the period is calculated as under;

1. Direct Material @ $ 8 per unit = (3,600 + 10,400) x $ 8 = $ 112,000 (it is assumed that all material are purchased at $ 8 per unit)

2. Direct Labour and Overhead = ($ 63,000 + $ 25,000 + $ 40,000 - $ 28,800) * 11,600 / (3,600 + 10,400) = $ 99,200 * 11,600 / 14,000 = $ 82,194.2857 or $ 82,194

Total Cost of units started and completed = $ 194,194 which is close to Option B. 190,275.

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