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

Answer:

A. Transfer -In= $212,000,000

B. Transfer-Out = $159,000,000

C. Ending balance= $53,000,000

Explanation:

a) Calculation for Transfers-In

Transfer -In=$46,000,000 + $76,000,000 + (.90× $100,000,000)

Transfer -In=$46,000,000 + $76,000,000 + $90,000,000

Transfer -In= $212,000,000

b) Calculation for Transfer-Out

Transfer-Out=.75 × $212,000,000

Transfer-Out = $159,000,000

c) Calculation for the ending balance

Using this formula

Ending balance=Transfer -In-Transfer-Out

Let plug in the formula

Ending balance= $212,000,000 - $159,000,000 Ending balance= $53,000,000