Determining Amounts after Fire Loss. Combust Oil Company had a fire on February 28, 20x2, two months
Question:
Determining Amounts after Fire Loss. Combust Oil Company had a fire on February 28, 20x2, two months into its fiscal year. The company's work-in-process inventory was completely destroyed. You have been asked to help determine the amount of work-in-process inventory at the time of the fire. in order that the company can file a claim with the insurance company. Inventories as of January 1, 20x2, were as follows: Direct material inventory Work-in-process inventory. Finished goods invertory $35.000 17.000 40.000 A physical inventory on March I showed direct materials inventory to be $10,000 and finished goods inventory to be $45,000. The general ledger shows that during January and February, the company purchased direct materials costing $40,000 and incurred direct labor costs of $62.000. Factory overhead costs for the two months totaled $28,000. Sales totaled $210,000, and gross margin normally averages 40 percent of sales. Required: Determine the following: Cost of goods sold.
b. Cost of goods manufactured.
c. The amount of work-in-process inventory lost in the fire. (It is not necessary to prepare a formal schedule of cost of goods manufactured, but it may be helpful to do so.)
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