1/ The following is an account for a production department, showing its costs fo

Question

1/ The following is an account for a production department, showing its costs for one month:

Assume that materials are added at the beginning of the production process and that direct labor and overhead are applied uniformly. If the started and completed units cost $42,250, what was the cost of completing the units in the beginning Work in Process inventory?

Multiple Choice

$37,260.

$2,560.

$13,350.

$55,600.

$8,360.

2/ A company uses the FIFO method for inventory costing. At the start of the period the production department had 40,000 units in beginning Work in Process inventory which were 30% complete; the department completed and transferred 165,000 units. At the end of the period, 12,000 units were in the ending Work in Process inventory and are 65% complete. The production department had labor costs in the beginning goods is process inventory of $87,000 and total labor costs added during the period are $726,550. Compute the equivalent cost per unit for labor.

Multiple Choice

$4.73.

$4.52.

$5.09.

$4.71.

$4.77.

3/ A company's beginning Work in Process inventory consisted of 26,000 units that were 20% complete with respect to direct labor. These beginning units were completed and another 99,600 units were started during the current period. Of those started, 66,000 were finished and the remaining 33,600 were 40% complete at the end of the period. Using the weighted-average method, the equivalent units of production with regard to direct labor were:

Multiple Choice

86,800.

109,200.

82,400.

66,000.

105,440.

Work in Process Inventory Beginning Balance 5,800 Completed and transferred out 50,610 Direct materials 22,000 Direct labor 16,600 Overhead 11,200 Ending Balance 4,990

Explanation / Answer

Part 1

Total Goods in Process Inventory = $ 49800

Cost of units to be transferred out = 49800 - 4990 = $ 44810

Cost of Completed Goods in Beginning Inventory = 44810 - 42250 = $ 2560 (Option B)

Part 2

Part 3

Equivalent units using weighted average method:
Units produced and finished in the month: 92000
Remainining in process = 33600 x 40% = 13440
Equivalent units = 105440 units (Option E)

Completed and transferred out 165000 Closing WIP 7800 Equivalent Unit 172800 Opening WIP Labour Cost $87,000.00 Cost added during the year $7,26,550.00 Total Costs $8,13,550.00 Equivalent Costs $4.71 (Option D)

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