The cost of goods for Mandy Manufacturing Company flow through an assembly and a
ID: 2432050 • Letter: T
Question
The cost of goods for Mandy Manufacturing 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.
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:
Multiple Choice
A. $81,000.
B. $134,000.
C. $140,000.
D. $128,000.
Assembly Finishing Direct Materials $ 12,000 $ 15,000 Direct Labor 24,000 46,000 Overhead 16,000 22,000Explanation / Answer
Solution:
Cost incurred in finishing department = Beginning WIP + Cost transferred in + Direct material + Direct labor + Overhead
= $4,000 + $47,000 + $15,000 + $46,000 + $22,000 = $134,000
Ending WIP in finishing department = $6,000
Cost of goods transferred to the Finished Goods Inventory account = Cost incurred in finishing - Ending WIP
= $134,000 - $6,000 = $128,000
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