Question

A new computer virus (AcctBGone) destroyed most of the company records at BackupsRntUs. The computer experts at the company could recover only a few fragments of the company’s factory ledger for March as follows.

Direct Materials Inventory
BB (3/1)	89,600

Work-In-Process Inventory
BB (3/1)	27,600

Finished Goods Inventory
EB (3/31)	66,500

Cost of Goods Sold

Manufacturing Overhead Control

Accounts Payable
		54,600	EB (3/31)

Further investigation and reconstruction from other sources yielded the following additional information:

• The controller remembers clearly that actual manufacturing overhead costs are recorded at $18 per direct labor-hour. (The company assigns actual overhead to Work-in-Process Inventory.)
• The production superintendent’s cost sheets showed only one job in Work-in-Process Inventory on March 31. Materials of $15,600 had been added to the job, and 320 direct labor-hours had been expended at $36 per hour.
• The Accounts Payable are for direct materials purchases only, according to the accounts payable clerk. He clearly remembers that the balance in the account was $36,000 on March 1. An analysis of canceled checks (kept in the treasurer’s office) shows that payments of $251,300 were made to suppliers during the month.
• The payroll ledger shows that 5,000 direct labor-hours were recorded for the month. The employment department has verified that there are no variations in pay rates among employees (this infuriated Steve Fung, who believed that his services were underpaid).
• Records maintained in the finished goods warehouse indicate that the finished goods inventory totaled $108,800 on March 1.
• The cost of goods manufactured in March was $563,800.

Required:

Determine the following amounts:

a. Work-in-process inventory, March 31.

b. Direct materials purchased during March.

c. Actual manufacturing overhead incurred during March.

d. Cost of goods sold for March.

Answer 1

a. Work in Process Inventory, March 31 = $ 32,880

b. Direct materials purchased during March : $ 269,900

c. Actual manufacturing overhead incurred during March : $ 90,000

d. Cost of Goods Sold for March : $ 606,100

Workings:

Direct Materials Inventory
BB 3/1	89,600	Issued to Production	299,080
Purchases	269,900
EB ( 3 / 31 )	60,420
Work in Process Inventory
BB 3/1	27,600	Cost of Goods Manufactured	563,800
Direct materials	299,080
Direct labor ( 5,000 DLH x $ 36 )	180,000
Manufacturing overhead ( 5,000 DLH x $ 18 )	90,000
EB ( 3 / 31 )	32,880
Finished Goods Inventory
BB ( 3 / 1 )	108,800	Cost of Goods Sold	606,100
Cost of Goods Manufactured	563,800
EB 3/31	66,500
Cost of Goods Sold
3 / 31	606,100
Manufacturing Overhead Control
Incurred	90,000	Applied	90,000
Accounts Payable
Cash	251,300	BB ( 3/1 )	36,000
		Direct Materials Purchases	269,900
		EB ( 3/ 31 )	54,600