The following information relates to Department Z for the month of July, the sol
ID: 2562360 • Letter: T
Question
The following information relates to Department Z for the month of July, the sole processing department of Company ABC. 23,000 units (5,000 units from Beginning WIP and 18,000 units started and completed during July) were transferred out of the department to finished goods. 2,000 units remain in the department at the end of July. A calculation of equivalent units for work performed during July appears below:
Equivalent Units
Equivalent Units
Direct Materials
Labor and Overhead
Beginning WIP
0
1,500
Units started and
Completed
18,000
18,000
Ending WIP
2,000
1,600
Total
20,000
21,100
a) Assume that cost per equivalent unit of direct materials equals $10.00 per unit and that the combined cost per equivalent unit of direct labor and factory overhead equals $20.00 per unit. Also assume that prior period beginning work in process costs total $10,000. Costs of units started and completed using the FIFO method would equal
b) Assume that cost per equivalent unit of direct materials equals $10.00 per unit and that the combined cost per equivalent unit of direct labor and factory overhead equals $20,00 per unit. Also assume that prior period beginning work in process costs total $10,000. Costs of ending work-in-process using the FIFO method would equal
c) Assume that cost per equivalent unit of direct materials equals $10.00 per unit and that the combined cost per equivalent unit of direct labor and factory overhead equals $20 per unit. Also assume that prior period beginning work in process costs total $10,000. Total costs of units transferred out of the department during the current month using the FIFO method would equal
Equivalent Units
Equivalent Units
Direct Materials
Labor and Overhead
Beginning WIP
0
1,500
Units started and
Completed
18,000
18,000
Ending WIP
2,000
1,600
Total
20,000
21,100
Explanation / Answer
a. Units started and completed during the period =18,000
Total Material Labor & Overhead
Equivalent units started and completed 18,000 18,000 18,000
Cost per equivalent unit $10 $20
Cost of units started and completed $180,000 $360,000
Total cost of units started and completed $540,000
b. Cost of ending Work in process
Total units Material Labor & overheads
Equivalent units in ending work in process 2,000 2,000 1,600
Cost per equivalent unit $10 $20
Cost of units in ending Work in proces $20,000 $32,000
Total cost of ending inventory $52,000
(c) Cost of beginning inventory completed during the year
Total Material Labor & overheads
Equivalent units of beginning work in process 6000 0 1,500
Cost per equivalent unit $10 $20
Cost of beginning work in process completed $30,000
Cost of beginning work in process transferred in $10,000
Cost incured on beginning work in process during the month $30,000
Cost of finished goods started and completed during the month $540,000
Total cost of the goods finished and transferred out during the month $590,000
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