(Missing data) The Juanita Company suffered major losses in a fire on May 23, 1997. In addition to destroying several buildings, the blaze destroyed the com- CASE pany’s work in process for an entire product line. Fortunately, the company was insured. However, the company needs to substantiate the amount of the claim.

To this end, the company has gathered the following information that pertains to production and sales of the affected product line: 1. The company’s sales for the first 23 days of May amounted to $230,000.

Normally, this product line generates a gross profit equal to 30 percent of sales. 2. Finished Goods Inventory was $29,000 on May 1 and $42,500 on May 23. 3. On May 1, Work in Process Inventory was $48,000. 4. During the first 23 days of May, the company incurred the following costs:

a. Determine the value of Work in Process Inventory that was destroyed by the fire.

b. What other information might the insurance company require? How would management determine or estimate this information?LO1

Transcribed Image Text:

Direct materials used $76,000 Direct labor 44,000 Manufacturing overhead 42,000