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In: Accounting

“The warehouse fire on April 30 was a disaster!” exclaimed Paul May, FRS Inc.’s Chief production...

“The warehouse fire on April 30 was a disaster!” exclaimed Paul May, FRS Inc.’s Chief production officer. “We need to fill out the insurance forms as soon as possible to get back all our lost inventories. It seems the fire destroyed our accounting system as well as backup production documentation”, he continued. John Christensen, the company’s controller walks into Mr. May’s office and shouts “I was able to salvage some data. Have a look.” John’s data contained the following: Beginning Inventories (April 1): Direct Materials: $40,000 Finished Goods Inventory: $48,000 Work-in-Process: $64,000. “I also know that our gross profit percentage is 40% and that prime costs are 60% of manufacturing costs” continued John. “That sounds about right” replies Paul May. “I was also told that overhead costs amount to 60% of conversion costs. Also, I’d say that our ending work-in process inventories were about 20% of the monthly manufacturing costs.” After further discussions, it was revealed that April’s sales were $1,000,000 and that direct labour costs and direct material purchase costs amounted to $400,000 and $550,000 respectively. “John, can you get back to me by tomorrow letting me know how much we can expect to get from our insurance company?

Part 1: Cost of Goods Manufactured
IFRS Inc.
Schedule of Cost of Goods Manufactured
Month ending April 30
Direct materials:
Beginning raw materials inventory
Add: Purchases of raw materials
Raw materials available for use
Deduct: Ending raw materials inventory
Raw materials used in production
Direct labour
Manuafacturing overhead
Total manufacturing costs
Add: Beginning WIP inventory
Deduct: Ending WIP inventory
Cost of goods manufactured
Part 2: Income Statement (partial)
IFRS Inc.
Income Statement (partial)
Month ending April 30
Sales
Cost of goods sold:
Beginning FG inventory
Add: COGM
Goods available for sale
Less: Ending FG inventory
Gross profit
Part 3: Inventories recoverable from insurance
Direct Materials
Work-in-Process
Finished Goods
TOTAL

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Expert Solution

ekkarill92 answered 1 year ago
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