Question

The flowchart below shows the August production activity of the punching and bending departments of Wire Box Company. Use the amounts shown on the flowchart to compute the missing numbers identified by question marks.

Short answer

1. Total cost in process in punching department:$94,500.
2. Cost transferred to bending: $88,500.
3. Direct material of bending: $171,750.
4. Cost transferred to finished goods: $236,400.
5. Cost of goods available for sale: $254,400.
6. Ending inventory in finished goods: $22,500.

Step-by-step solution

Definition of Direct Labor

The cost incurred by the business entity in respect of the labor employed in the production process is known as direct labor. Such cost only includes those laborers that are directly attached to the production.

Calculation of missing figures

1. Calculation of total cost in process in punching department

Particular	Amount $
Beginning work-in-process	$7,500
Add: Direct material	60,000
Add: Direct labor	12,000
Add: Factory overhead	15,000
Total cost in process in punching department	$94,500

2.Calculation of cost transferred to bending department

Particular	Amount $
Total cost in process in punching department	$94,500
Less: Ending work-in-process	(6,000)
Cost transferred to the bending department	$88,500

3. Calculation of cost of direct material of bending

Particular	Amount $
Total cost in process in bending department	$249,150
Less:
Beginning work-in-process	(9,750)
Direct labor	(30,750)
Factory overhead	(36,900)
Direct material	$171,750

4. Cost transferred to finished goods

Particular	Amount $
Total cost in process in bending department	$249,150
Less: Ending work-in-process	(12,750)
Cost transferred to the bending department	$236,400

5. Cost of goods available for sale:

Particular	Amount $
Beginning inventory	$18,000
Add: Cost transferred to the bending department	236,400
Cost of goods available for sale	$254,400

6. Ending inventory in finished goods:

Particular	Amount $
Cost of goods available for sale	$254,400
Less: Cost of goods sold	(231,900)
Ending inventory in finished goods	$22,500