Total Goods in Process Inventory = $5,400 + $21,600 + $16,200 + $10,800 = $$54,000

1. The following is an account for a production department, showing its costs for one month:
Goods in Process Inventory
Balance: 5,400
Direct Materials21,600
Direct Labor16,200
Overhead10,800
Assuming that materials are added at the beginning of the production process and that direct labor and overhead are applied uniformly. If the units in ending goods in process inventory costs $4,590 and the started and completed unit costs $41,850, what was the cost of completing the units in the beginning goods in process inventory?

Use a T account to set up the WIP account by putting in the beginning balance of 5,400 on the debit side and then put on the debit side the added cost of DM, DL and FOH (21,600 & 16,200 & 10,800). Then put a line under the 4 items on the debit side and total. The total should be 54,000. Then derive the entry for the cost to be transferred out (54,000 – 5,400 = 49,410) which is the total of the costs minus the ending balance of the WIP. The transferred cost is equal to the cost of completing the beginning units and the cost of the started and transferred cost. Therefore, subtract the started and transferred cost from the total (49,410 – 41,850 = 7,560) which would be the cost of completing the beginning units.

Total Goods in Process Inventory = $5,400 + $21,600 + $16,200 + $10,800 = $$54,000

Cost of unites to be transferred out = $54,000- $4,590 = $49,410

Cost of Completed Goods in Beginning Inventory = $49,410 - $41,850 = $7,560

2. Hou Company applies factory overhead to its production department on the basis of 90% of direct labor costs. In the Assembly Department, Hou had $125,000 of direct labor costs, and in the Finishing Department, Hou had $35,000 of direct labor cost. The journal entry to apply overhead to these production departments would be? Multiple choice answers below.
A. Factory Overhead-Assembly112,500
Factory Overhead-Finishing 31,500
Work in Process144,000
B. Factory Overhead144,000
Work in Process-Assembly112,500
Work in Process-Finishing 31,500
C. Factory Overhead144,000
Factory Payroll144,000
D. Work in Process-Assembly112,500
Work in Process-Finishing 31,500
Factory Overhead144,000
E.Factory Payroll144,000
Cash144,000

The overhead amount in Assembly department = $125,000*0.9= $112,500

Overhead in Finishing department is $35,000*0.9=$31,500.

Therefore, the entry would be:

Work in Process – Assembly $112,500

Work in Process – Finishing $31,500

Factory Overhead $144,000