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	$3,600
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	$27,300
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		16,500	Factory Overhead Incurred
			Cost of Goods Sold

Answer 1

Let's assume,Materials inventory on Jan 31=x
Materials inventory on Feb. 28=50% of materials inventory on Jan. 31=50%*x=0.50 x
Decrease in materials inventory=$ 3600
Decrease in materials inventory=Materials inventory on Jan 31-Materials inventory on Feb. 28=x-0.50x=0.50x
Hence,	0.50x=3600
x=3600/0.50=$ 7200
Materials inventory on Jan 31=$ 7200
Materials inventory on Feb. 28=0.50*7200=$ 3600
Direct materials used:
		Materials inventory
Particulars		Debit	Particulars		Credit
Beg bal		7200	Direct materials used		15300
Material purchased		11700	(Balancing figure)
			End Bal.		3600
		18900			18900
Direct materials used=3 times the labor cost incurred=3*labor cost incurred
labor cost incurred=Direct materials used/3=15300/3=$ 5100
Total manufacturing costs incurred in period=$ 27300
Total manufacturing costs incurred in period=Direct materials used+Direct labor cost incurred+Factory overhead incurred
Direct materials used+Direct labor cost incurred+Factory overhead incurred=27300
Factory overhead incurred=27300-Direct materials used-Direct labor cost incurred=27300-15300-5100=$ 6900
Total manufacturing costs incurred in period=70% of Cost of Goods Manufactured=70%*Cost of goods manufactured
Cost of goods manufactured=Total manufacturing costs incurred in period/70%=27300/70%=$ 39000
Cost of goods manufactured=Total manufacturing costs incurred in period+WIP inventory on Jan 31-WIP inventory on Feb 28
WIP inventory on Feb 28=Total manufacturing costs incurred in period+WIP inventory on Jan 31-Cost of goods manufactured
WIP inventory on Feb 28=27300+21000-39000=$ 9300
Total manufacturing costs incurred in period=$8,000 less than Cost of Goods Sold=Cost of goods sold-8000
Cost of goods sold=Total manufacturing costs incurred in period+8000=27300+8000=$ 35300
Cost of goods sold=Cost of goods manufactured+Finished goods inventory on Jan 31-Finished goods inventory on Feb 28
Finished goods inventory on Jan 31=Cost of goods sold-Cost of goods manufactured+Finished goods inventory on Feb 28=35300-39000+16500=$ 12800
			Account balances
Account			Jan 31.	Feb 28.
Materials inventory			7200	3600
WIP inventory			21000	9300
Finished goods inventory			12800	16500
Costs incurred:
				$
Direct Materials Used				15300
Direct Labor Incurred				5100
Factory Overhead Incurred				6900
Cost of Goods Sold				35300