Question Help More Info The beginning inventory numbers are as follows: (Click the icon to view beginning inventory numbers.) Before the disaster recovery specialists clean the buildings, Marissa Calbert, the company controller, is anxious to salvage whatever records she can to support an insurance claim for the destroyed inventory. She is standing in what is left of the Accounting Department wih Tony Martinez, the cost accountant. Requirement Determine the ending inventories of raw materials, work in process, and finished goods. Assume that Raw Materials Inventory contains only direct materials. I didn\'t know mud could smell so bad,\" Tony says. \"What should I be looking for? Don\'t worry about beginning inventory numbers,\" responds Marissa. \"We\'ll get them from last year\'s annual report. We need first-quarter cost data. Data Table \"I was working on the first-quarter results just before the storm hit,\" Tony says. \"Look, my report\'s still in my desk drawer. But acan make out is that for the first quarter, material purchases were $537,000 and that direct labor, manufacturing overhead (other than indirect materials), and total manufacturing costs to account for were $523,000; $190,000; and $1,504,000, respectively. Wait, and cost of goods available for sale was $1,570,000.\" Raw materials, $103,000 .Work in process, $214,000 Finished goods, $224,000 Great,\" says Marissa. \"I remember that sales for the period were approximately $1.6 million. Given our gross profit of 15%, that\'s all you should need.\" Tony is not sure about that, but decides to see what he can do with this information. He remembers several schedules he learned in college that may help him get started. PrintDone Print Done
Solution:
Gross profit percentage = (Sales revenue - Cost of goods sold)/Sales revenue
15% = ($1,600,000 – Cost of goods sold)/$1,600,000
Cost of goods sold = $1,360,000
Cost of goods available for Sale - Ending finished goods inventory = Cost of goods sold
$1,570,000 – Ending finished goods inventory = $1,360,000
Ending finished goods inventory = $210,000
Cost of goods available for sale = Beginning finished goods + Cost of goods manufactured
$1,570,000 = $224,000 + Cost of goods manufactured
$1,346,000 = Cost of goods manufactured
Total manufacturing costs to account for – Ending work in process = Cost of goods manufactured
$1,504,000 – Ending work in process = $1,346,000
Ending work in process = $158,000
Beginning WIP + Total manufacturing costs incurred = Total manufacturing costs to account for
$214,000 + Total manufacturing costs incurred = $1,504,000
Total manufacturing costs incurred = $1,290,000
Direct material used + Direct labor + Manufacturing overhead = Total manufacturing costs incurred
Direct material used + $523,000 + $190,000 = $1,290,000
Direct material used= $577,000
Beginning direct material + Purchased material – Ending direct material = Direct material used
$103,000 + $537000 – Ending direct material = $577,000
Ending direct material = $63,000
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