Question

Last night, the sprinkler system at Plant A was accidentally set off. The ensuing deluge destroyed most of the cost records in Plant A for the month just completed (May). The plant manager has come to you in a panic—he has to complete his report for head office by the end of today. He wants you to give him the numbers he needs for his report. He can provide you with some fragments of information he has been able to salvage: Raw materials: Beginning $24,600 Ending 55,300 Work in process: Beginning 16,700 Finished goods: Sold in May 401,000 Ending 51,000 Manufacturing overhead: Beginning 0 Accrued wages payable: Beginning 10,500 Ending 19,700 Other information: 1. Total direct materials requisitions for the month were $180,100. 2. A total of 9,000 direct labour hours were worked during the month at an average wage of $15/hour. 3. Manufacturing overhead of $101,400 was incurred during the period. 4. On May 31, the ending inventory of work in process is $5,500. Calculate the following:

The material purchased during May. Material purchased $

The amount paid to the labour force in May. Amount paid to the labour force $

The cost of goods transferred from work in process inventory to finished goods inventory in May. Cost of goods transferred from work in process inventory to finished goods inventory $

The cost of finished goods inventory at the beginning of May. Cost of finished goods inventory $

Answer 1

a. Materials Purchased during may = $210800

Calculation

Raw Material requisition	$180100
Add: Ending Raw material	$55300
Less:Beginning Raw Material	($24600)
Material Purchased	$210800

b.The amount Paid to Labor force in May = $125800

Calculation

Actual Labor cost during may ( 9000hour x $15)	$135000
Add:Beginning wage payable	$10500
Less: Ending wage payable	($19700)
Amount paid to labor force	$125800

c. Cost of goods transferred from work in process(WIP) inventory to finished goods inventory = $427700

Calculation

Beginning WIP	$16700
Add:Direct material	$180100
Add:Direct labor(9000hour x $15)	$135000
Add:Manufacturing overhead	$101400
Less: Ending WIP	($5500)
Cost of goods transferred from WIP to finished goods	$427700

d.Cost of finished good inventory at the beginning of may =$24300

Calculation

Cost of goods sold	$401000
Add: Ending inventory of finished goods	$51000
Less: Transferred from WIP during May( Calculated in (c) above )	($427700)
Cost of Beginning finished goods	$24300