Question

The cutting department is the first department of Shoe Maker, LLC. On March 1, 2019, the beginning inventory in this department consisted of 670 units. Costs for the beginning work in process were as follows:

Materials (100% complete)	$	6,700
Labor (60% complete)		4,700
Overhead (60% complete)		3,700

During March 2019, 2,750 units were started into production with the following costs:

Materials	$	31,604
Labor		23,142
Overhead		16,136

The number of units completed and sent to the finishing department was 2,850. The ending inventory of 570 units was 100 percent complete with regard to materials, 80 percent complete with regard to labor and overhead.

1. Compute the equivalent production for overhead for March.
2. Compute the cost per equivalent unit for overhead for March.
3. Compute the cost of overhead in the goods transferred out.
4. Compute the cost of overhead in the ending work in process inventory.

1.

Equivalent units for overhead
Units completed
Ending WIP-overhead
Overhead equivalent units

2.

Cost per unit for overhead
Beginning overhead cost
Overhead cost incurred during March
Overhead equivalent units
Cost per unit for overhead

3.

Overhead Cost
Units completed
Cost per unit for overhead
Overhead costs transferred out

4.

Cost of overhead
Beginning overhead cost
Overhead cost incurred during March
Overhead cost transferred out
Overhead cost in ending work in progress

Answer 1

Answers

1
Equivalent units for overhead
Units completed	2,850
Ending WIP-overhead [570 units x 80%]	456
Overhead equivalent units	3,306
2
Cost per unit for overhead
Beginning overhead cost	$3,700
Overhead cost incurred during March	$16,136
Overhead equivalent units	3,306
Cost per unit for overhead [($3700 + 16136) / 3306 units]	$6
3
Overhead Cost
Units completed	2850
Cost per unit for overhead	$6
Overhead costs transferred out	$17,100
4
Cost of overhead
Beginning overhead cost	$3,700
Overhead cost incurred during March	$16,136
Overhead cost transferred out	$17,100
Overhead cost in ending work in progress [$3700 + 16136 - $17100]	$2,736