Question

At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he’s collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured.

Data for February
Decrease in materials inventory	$3,000
Materials inventory on Feb. 28	50% of materials inventory on Jan. 31
Direct materials purchased	$11,700
Direct materials used	3 times the direct labor incurred
Total manufacturing costs incurred in period	$28,700
Total manufacturing costs incurred in period	70% of Cost of Goods Manufactured
Total manufacturing costs incurred in period	$8,000 less than Cost of Goods Sold

Account	Account Balances		Costs Incurred
	Jan. 31	Feb. 28
Materials Inventory			Direct Materials Used
Work in Process Inventory	21,000		Direct Labor Incurred
Finished Goods Inventory		15,500	Factory Overhead Incurred
			Cost of Goods Sold

Answer 1

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Material Inventory:
Let Jan 31 Material Inventory		x
Material Inventory as on 28th Feb		0.50x
x-0.50x=	$          -3,000
x=	$           6,000
Jan 31, Material Inventory	$           6,000			A
Feb 28, Material Inventory	$           3,000			B
Direct Material Used:
Beginning Material Inventory		$    6,000
Add: Purchase		$ 11,700
Less: Ending Material Inventory		$   -3,000
Direct Material Used		$ 14,700		C
Direct Labor incurred:
Direct Material Used/3		$    4,900		D
Factory overhead Incurred:
Manufacturing Cost incurred		$ 28,700
Less: Direct Material		$ -14,700
Less: Direct Labor		$   -4,900
Factory overhead Incurred:		$    9,100		E
Work in Process Inventory, Ending:
Beginning Work in process inventory		$ 21,000
Add: Manufacturing Cost incurred		$ 28,700
Less: Cost of goods Manufactured	$28,700/70%	$ -41,000
Work in process inventory, Ending		$    8,700		F
Cost of Goods Sold:
$28,700+$80,000		$108,700		G
Finished Goods Beginning Inventory
Cost of Good Sold		$108,700
Less:Cost of Goods Manufactured		$ -41,000
Add: Finished Goods Inventory, Ending		$ 15,500
Finished Goods Beginning Inventory		$ 83,200		H