In: Accounting
Of all the times this hard drive could crash, it had to be now,
” Marcy cried. “How can I finish the June financial reports without
all the information? I knew I should have backed up the disk last
night before I left work.” News of the disaster traveled quickly
through the office, and people began to stop by her cubicle to
offer their help.
John was the first to the rescue. “It
might not be as bad as you think, Marcy. I have the financial
reports from May right here. According to the balance sheet, we had
a total inventory of $99,000 at the end of May. And I remember that
the Finished Goods Inventory was one-third of that amount.”
“I just finished the inventory counts
last night,” Peter chimed in from across the hall. “According to my
tally sheets, we finished June with $80,000 in Direct Materials
Inventory, $52,000 in Work in Process Inventory, and $25,000 in
Finished Goods Inventory. This was a 100% increase from the
balances in Direct Materials Inventory and Work in Process
Inventory at the end of May. I bet with a little more investigative
work, we can get all the numbers you need to complete the
reports.”
Sally called from Payroll to tell
Marcy that the company had paid a total of $36,000 for direct labor
during June. Juan, the billing supervisor, e-mailed Marcy that the
company had sent out invoices to customers totaling $291,000.
Marcy knew that the overhead rate was
200% of direct labor costs. She also knew that the company priced
its product using a 50% markup on the cost of goods sold. Armed
with all this information, she sat down to reconstruct the
inventory accounts for June.
(1) Calculate the begininng finished goods. (Round answer to the nearest dollar amount, e.g. 5,275.)
(2) Calculate the beginning direct materials. (Round answer to the nearest dollar amount, e.g. 5,275.)
(3) Calculate the beginning work in process. (Round answer to the nearest dollar amount, e.g. 5,275.)
(4) Calculate the cost of goods sold. (Round answer to the nearest dollar amount, e.g. 5,275.)
(5) Calculate the cost of goods manufactured. (Round answer to the nearest dollar amount, e.g. 5,275.)
(6) Calculate the direct material used. (Round answer to the nearest dollar amount, e.g. 5,275.)
(7) Calculate the amount of purchases. (Round answer to the nearest dollar amount, e.g. 5,275.)
(8) State the amount of direct labor for the month.
(9) Calculate the amount of applied overhead.
Mark up = 50% of cost of goods sold
Hence, mark up = 50/150 of sales revenue
Sales revenue = $291,000
Hence, mark up = 291,000 x 50/150
= $97,000
Cost of goods sold = Sales - Mark up
= 291,000 - 97,000
= $194,000
Direct materials: |
|
Beginning raw material inventory |
40,000 |
Add: Purchases of raw material |
144,000 |
Total raw materials available |
184,000 |
Less: Ending raw materials inventory |
- 80,000 |
Raw materials used in production |
104,000 |
Direct labor |
36,000 |
Manufacturing overhead applied to work in process |
72,000 |
Total manufacturing cost |
212,000 |
Add: Beginning work in process inventory |
26,000 |
238,000 |
|
Less: Ending work in process inventory |
-52,000 |
Cost of goods manufactured |
186,000 |
Beginning finished goods inventory |
33,000 |
Add: Cost of goods manufactured |
186,000 |
Cost of goods available for sale |
219,000 |
Less: Ending finished goods inventory |
-25,000 |
Cost of goods sold |
194,000 |
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