Question

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

1. Purchased $100 million in direct materials.
2. Incurred direct labor costs of $46 million.
3. Determined that manufacturing overhead was $76 million.
4. Transferred 90 percent of the materials purchased to work-in-process.
5. Completed work on 75 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.
Required:
Give the amounts for the following items in the Work-in-process account: (Do not round your intermediate calculations. Enter your final answers in millions rounded to 2 decimal places.)
Transfers-In ____ Million
Transfers-Out ______ Million
Ending Balance _____ Million

Answer 1

Transfers-In

= Direct materials + Direct labor costs + Manufacturing overhead

= (90% * 100) + 46 + 76

= $212 million

Transfer-Out

= Cost transferred in * work completed

= 212 * 75%

= $159 million

Ending Balance

= Cost transferred in - Cost transferred out

= 212 - 159

= $53 million