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)	90,700

Work-In-Process Inventory
BB (3/1)	27,400

Finished Goods Inventory
EB (3/31)	66,100

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 $19 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 $15,700 had been added to the job, and 300 direct labor-hours had been expended at $34 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 $35,600 on March 1. An analysis of canceled checks (kept in the treasurer’s office) shows that payments of $252,900 were made to suppliers during the month.

The payroll ledger shows that 5,400 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 $109,000 on March 1.

The cost of goods manufactured in March was $564,100.

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 Progress inventory on march 31st
		Working
	Manufacturing Overhead cost	(Labor hours*Overhead labor rate)
		(1500*19)	28500
	Material on WIP inventory		15700
	WIP as on 31st march		44200
b)	Direct Material Purchased During March
	Closing Balance of Accounts Payable	(A)	54600
	Opening balance of Accounts Payable	(B)	35600
	Payment for Accounts Payable	(C )	252900
	Purchases During March	(D=A+B-C)	271900
c)	Actual Manufacturing Overhead Incurred During March
	Direct Labor Hours	(A)	5400
	Rate of Manufacturing Labor hour	(B)	19
	Manufacturing Overhead Incurred	(C=A*B)	102600
d)	Schedule of Cost of Goods Sold
	Opening Finished Goods Inventory	(A)	109000
	Cost of Goods Manufactured	(B)	564100
	Less: Closing Finished Goods Inventory	(C )	66100
	Cost of Goods Sold	(D=A+B-C)	607000