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27 December, 16:44

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. 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? A. $1,615B. $3,250C. $2,600D. $2,500E. $1,500

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  1. 27 December, 16:51
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    A. $1,615

    Explanation:

    Provided information,

    Total transferred units = 50,000

    Opening units = 20,000 which were 1/5 th complete

    Equivalent units = 4,000

    That means on the remaining 20,000 - 4,000 = 16,000 units full overheads were applied.

    30,000 units were started and completed during the month, for which entire overheads will be added.

    Newly started = 10,000 units 3/5th complete = 6,000 units completed in closing inventory.

    Therefore total equivalent completed units on which overheads applied = 16,000 + 30,000 + 6,000 = 52,000 units

    Ending goods in inventory = 10,000 units which are 6,000 equivalent units completed

    Total overheads for the month = $14,000

    Overheads = $14,000/52,000 = 0.269 per unit

    For 6,000 units = $1,615.38

    Therefore correct option is

    A. $1,615
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