Question

Options20-

$2420
$4840
$3848
$2600
Department A had no Work-in-Process at the beginning of the period, 1,600 units were completed during the period, 260 units were 50% completed at the end of the period, and the following manufacturing

Answer 1

The direct method results in a cost of goods manufactured of $3848. The direct method allocates manufacturing costs directly to the units produced.

The following steps are used to calculate the cost of goods manufactured using the direct method:

1. Calculate the total manufacturing costs incurred during the period.

2. Calculate the equivalent units of production.

3. Allocate the manufacturing costs to the equivalent units of production.

4. Calculate the cost per unit.

5. Multiply the cost per unit by the number of units completed to determine the cost of goods manufactured.

In this case, the total manufacturing costs incurred during the period are $4840. The equivalent units of production are 1600 + (260 * 50%) = 1860. The cost per unit is $4840 / 1860 = $26. The cost of goods manufactured is $26 * 1600 = $3848.

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