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| Griffin Watches, Inc., makes watches. Its assembly department started the accounting period with a beginning inventory balance of $25,500. During the accounting period, the department incurred $46,500 of transferred-in cost, $27,000 of materials cost, $61,000 of labor cost, and $79,400 of applied overhead cost. The department processed 6,300 total equivalent units of product during the accounting period. |
| Required: |
| a. | Assuming that 1,150 equivalent units of product were in the ending work in process inventory, determine the amount of cost transferred out of the Work in Process Inventory account of the assembly department to the Finished Goods Inventory account. What was the assembly department’s cost of ending work in process inventory?
Cost Allocation: To finishing goods: ? To ending inventory: ? |
| b. | Assuming that 5,650 units of product were transferred out of the assembly department’s work in process inventory to finished goods inventory, determine the amount of the assembly department’s cost of ending work in process inventory. What was the cost of the finished goods inventory transferred out of the assembly department? |
Cost Allocation:
To finishing goods: ?
To ending inventory: ?
Expert Answer
Solution
Equivalent cost per unit=total cost/equivalent units
=($25,500+$46,500+$27,000+$61,000+$79,400)/6,300
=$38 per unit
A.
Cost allocation:
To finished good :(6300-1150)×$38=$195,700
To ending inventory:1150×$38=$43,700
B.
Cost allocation:
To finished goods:5650×$38=$214,700
To ending inventory:(6300-5650)×$38=$24,700
