Question

Assume that the following events occurred at a division of Generic Electric for March of the current year:

1. Purchased $15 million in direct materials.
2. Incurred direct labor costs of $8 million.
3. Determined that manufacturing overhead was $13.5 million.
4. Transferred 70 percent of the materials purchased to work-in-process.
5. Completed work on 65 percent of the work-in-process. Costs are assigned equally across all work-in-process.
6. The inventory accounts have no beginning balances. All costs incurred were debited to the appropriate account and credited to Accounts Payable.

Give the amounts for the following items in the work-in-process accounts:

a. Transfers-in
b. Transfers-out
c. Ending balance

Answer 1

The transfer-in amount for work-in-process is $10.5 million, the transfer-out amount is $6.825 million, and the ending balance is $3.675 million.

Step-by-step explanation:

The amounts for the following items in the work-in-process accounts are:

a. Transfers-in: $10.5 million (70% of $15 million)

b. Transfers-out: $6.825 million (65% of $10.5 million)

c. Ending balance: $3.675 million ($10.5 million - $6.825 million)

Answer 2

Transferred in Manufacturing Costs $ 32,000,000

Transferred out $ 20,800,000

Ending Balance $ 11,200,000

Step-by-step explanation:

Generic Electric

Material Purchases $ 15,000,000

Transferred to Work in Process = 10,500,000

Direct Labor $ 8,000,000

Manufacturing Overhead $ 13,500,000

Total Manufacturing Costs $ 36,500,000

Transferred in Manufacturing Costs $ 32,000,000

Completed 65 % of $ 32,000,000=$ 20,800,000

Transferred out $ 20,800,000

Ending Balance = $ 32,000,000-$ 20,800,000= $ 11,200,000