A tornado touched down and destroyed most of a company’s facilities. However, the controller and the cost accountant were able to recover a small part of manufacturing cost data for the current and prior months. They need records in order to file an insurance claim.

This is the data they were able to recover:

Direct Labor Cost $250,000

Purchase of Raw Materials $365,000

Raw Materials used for the month $350,000

Sales for the month $1,240,000

Gross Profit Ratio 40% of sales

Cost of goods available for sale $770,000

Manufacturing overhead was 60% of direct labor

Inventories at the end of the prior month: Finished Goods $38,000; Work in Process $25,000; and Raw Materials $19,000.

Instructions:

1. Calculate the amount of cost in the Raw Materials, Work in Process, and Finished Goods Inventory (in other words, the ending balance in these accounts) for the current month (when the tornado took place) using the information above.
2. Using the knowledge acquired in the prior chapter (chapter 15):

• 1. What analysis or conclusions can you make from the data?
• 2. Can the data be used to prepare complete financial statements?
• If your answer is yes, which complete financial statement (s) can be completed with this data? (You must know the information that is included on each financial statement to answer this question)
• Will this be helpful for the insurance company to process a claim?

NOTE:  include all calculations