The debits to Work-in-Process for Department #2 for the month of April of the current year,together with information concerning production,are presented below.All direct materials come from Department #1.The units completed include the 1,200 in process at the beginning of the period.Department #2 uses FIFO costing. The unit cost of Product X started in the prior period and completed in the current period is:

Question

The debits to Work-in-Process for Department #2 for the month of April of the current year,together with information concerning production,are presented below.All direct materials come from Department #1.The units completed include the 1,200 in process at the beginning of the period.Department #2 uses FIFO costing.  The unit cost of Product X started in the prior period and completed in the current period is:

Quizplus · Accepted Answer

To calculate the unit cost of Product X started in the prior period and completed in the current period, we need to determine the total cost of units completed in Department #2.

Total cost of units completed = Total costs transferred in from Department #1 + Direct materials added in Department #2 + Direct labor incurred in Department #2 + Manufacturing overhead incurred in Department #2

Total costs transferred in from Department #1 = 7,800 
Direct materials added in Department #2 = 2,940 
Direct labor incurred in Department #2 = 1,200 
Manufacturing overhead incurred in Department #2 = (450 + 10% of direct labor costs) x 1,200/1,250 = 468

Total cost of units completed = 7,800 + 2,940 + 1,200 + 468 = 12,408

The number of units started in the prior period and completed in the current period is 1,600 (1,200 in beginning WIP + 400 started in April).

Therefore, the unit cost of Product X = Total cost of units completed / Number of units completed = 12,408 / 1,600 = 7.755

Since Department #2 uses FIFO costing, the units started in the prior period will be considered as first to be completed. These units were started at a cost of $2.00 per unit (6,000/3,000 = $2.00).

The units started and completed in the current period were started at a cost of $3.60 per unit (6,960/1,940 = $3.60).

As a result, the unit cost of Product X started in the prior period and completed in the current period is calculated as follows:

Unit cost = (1,200 x $2.00 + 400 x $3.60) / 1,600 = $3.60

Therefore, the correct answer is B.

The Debits to Work-In-Process for Department #2 for the Month