Here are the teachers notes
NOTE: Assume the following for Department 2, April 2011:
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During the month, department 2 transferred in 17,000 units from department 1. All production was completed in April; therefore, there is no ending inventory for April. Direct labor is $175,000 and factory overhead is $87,500 (same as March 2011). Round all dollar amounts to the nearest cent.
Since there are some discrepancies in the handout provided for the month of April for Department 2. Please see my notes below:
First, please note that the percentage given for beginning inventory is what is already completed, so you always have to use the complement; for example, if beginning inventory is 40% completed, then in March the other 60% will be completed;
Secondly, the percentage given for ending inventory is used as given since that percent was completed in current month;
Third, the ending inventory one month becomes the beginning inventory next month; for department 2 assume no ending inventory exists for April;
Fourth, what was completed in department 1 are the units transferred into department 2 in a given month. For example, in March, Department 1 completes 21000 units (6000 in beginning inventory and 15000 that were started and completed). These units are transferred to Department 2 in March. Department 2 already has 5000 units in beginning inventory. March’s ending inventory becomes April’s beginning inventory for Department 1. March’s ending inventory becomes April’s beginning inventory for Department 2, and assume no ending inventory for Department 2 for April.
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