Department S had no work in process at the beginning of the

Department S had no work in process at the beginning of the period. 11,898 units of direct materials were added during the period at a cost of $83,286, 8,924 units were completed during the period, and 2,974 units were 29% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $58,132 and factory overhead was $9,633.

What were the total cost of units completed during the period?

Select the correct answer.

Solution

a. We are told that all materials costs are incurred at the start of the process, that 11,898 units were started, and that total materials costs were $83,286. So the unit materials cost is $83,286/11,898 = $7.

b. We are told that labor costs were $58,132 and these covered the costs of 8,924 completed units and 2,974 units which were 29% complete. Let the unit labor cost be x. Then $58,132 = 8,924x + 2,974*0.29x = 9,900x. So x = $58,132/9,786.46 = $5.94

c. Following the same method in b. above for overhead costs, we obtain unit overhead costs as $1/unit.

So the total cost of a completed unit is $7 materials + $5.94 labor + $1 overheads = $13.94per unit.
We completed 8,924 units, so the total cost of units completed during the period was 8,924*£13.94 = $124,400.56.