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A distraught employee, Guy Arson, put a torch to a manufacturing plant on February 26. The resulting blaze completely destroyed the plant and its contents.
A distraught employee, Guy Arson, put a torch to a manufacturing plant on February 26. The resulting blaze completely destroyed the plant and its contents. Fortunately, some accounting records were kept in another building. They revealed the following for the period from January 1 to February 26:
Direct materials (DM) Inventory Jan 1 19,200
Purchases DM Jan 1 to Feb 26 192,000
Ending DM inventory Feb 26 74,400
Work in Progress (WIP) Jan 1 40,800
Cost of direct labour 216,000
Cost of Overhead used 144,000
Work in Progress Feb 26 33,600
Finished Goods (FG) Jan 1 36,000
Finished Goods Feb 26 60,000
Calculate the following:
Cost of DM used
Cost of finished goods produced
Cost of goods sold
Total value of DM, WIP and FG lost due to the fire
Where would you classify the cost of Insurance and why?
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