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 cost of goods transferred to finished goods 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 cost of goods transferred to finished goods is:

Quizplus · Accepted Answer

The cost of goods transferred to finished goods is calculated as follows:
Beginning WIP Inventory + Total Manufacturing Costs - Ending WIP Inventory = Cost of Goods Transferred to Finished Goods

Beginning WIP Inventory = 1,200 units x $3 = $3,600
Total Manufacturing Costs = Direct Materials + Direct Labor + Factory Overhead
Direct Materials = 8,000 units x $2.50 = $20,000
Direct Labor = 8,000 units x $1.50 = $12,000
Factory Overhead = 8,000 units x $0.50 = $4,000
Total Manufacturing Costs = $20,000 + $12,000 + $4,000 = $36,000
Ending WIP Inventory = 600 units x  $3.20 = $1,920

Therefore, Cost of Goods Transferred to Finished Goods = $3,600 + $36,000 - $1,920 = $16,680. Since the question asks for the cost of goods transferred (not including the beginning WIP Inventory), the answer is $16,680 - $3,600 = $13,080, which is closest to choice B ($16,000).

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