Question

Department G had 2,400 units 25% completed at the beginning of the period, 12,600 units were completed during the period, 2,000 units were 20% completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period:

Work in process, beginning of period	$27,500
Costs added during period:
Direct materials (12,200 units at $9)	109,800
Direct labor	111,600
Factory overhead	49,600

All direct materials are placed in process at the beginning of production, and the first-in, first-out method of inventory costing is used. What is the total cost of 2,400 units of beginning inventory that were completed during the period?

a. $50,900

b. $46,220

c. $27,500

d. $52,900

Answer 1

Total inventory at the beginning of the period is 2400 units completed 25%

i.e. equivalent units on which work was done during the period = 2400 * 75% = 1800 units

Units added during the period = 12,200 units

while inventory units at the end of the period = 2000 units of which 20% was completed, therefore equivalent units on which work was done = 20% of 2000 = 400 units

Total units produced during the period = 1,800 + 12,200 - (2000 - 400) = 12,400 units

Therefore, total labour cost and overheads cost per unit of production = (111,600 + 49,600)/12,400 = $13 per unit

Therefore, Total cost of beginning inventory = Opening cost + cost of production on equivalent 1800 units = $27,500 + 13*1800 = $50,900

Therefore, correct answer is Option A.