Question

During the current period, Department A finished and transferred 50,000 units to Department B. Of the 50,000 units, 20,000 were one-fifth complete at the beginning of the period and 30,000 were started and completed during the period. Also during the period, 10,000 units were started but brought only to a stage of being three-fifths completed. Beginning goods in process inventory overhead costs were $6,000. If the weighted-average method is used and $14,000 of overhead was charged to Department A during the period, how much overhead should be allocated to the ending goods in process inventory?

Answer 1

Answer:

Overhead cost of ending WIP = $2,160

Explanation:

Beginning Work in Process (WIP) cost: $6,000

Cost charged during the period: $14,000

Total Cost of the Units: $6,000 + $14,000 = $20,000

Equivalent Units of Production (EUP): Started and Completed + Ending WIP Units

EUP: 50,000 + 10,000 x 3/5 = 56,000

Cost per Equivalent Unit: Total Cost of Units / Equivalent Units of Production

Cost per EUP: $20,000 / 56,000 = $0,36

Overhead cost of ending WIP = (10,000 x 3/5) * $036 = $2,160