Question

The cost of goods for ABC 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:

Direct Materials: Assembly $12,000, Finishing $15,000

Direct Labor: Assembly $24,000, Finishing $46,000

Overhead: Assembly $16,000, Finishing $22,000

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:

a) $81,000

b) $134,000

c) $140,000

d) $128,000

Answer 1

• The correct answer is Option ‘d’: $ 128,000
• Working:

Cost t/f from Assembly department to Finishing Department	$                             47,000.00
Finishing Department:
Beginning WIP Cost	$                               4,000.00
Direct Material	$                             15,000.00
Direct Labor	$                             46,000.00
Overhead	$                             22,000.00
Total of all above costs	$                           134,000.00
Less: Ending WIP in finishing department cost	$                               6,000.00
Cost of Goods t/f to Finished Goods Inventory	$                           128,000.00