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 month.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

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

Instructions:

#1

Calculatethe amount of cost in theRaw Materials, Work in Process, and Finished Goods Inventory accountsfor the current month (when the tornado took place) using the information above.

#2

Using the knowledge acquired in the prior chapter and the ACG 2021 course (financial accounting), what analysis or conclusions can you make from the data?

#3

Can the data be used to prepare financial statements?

#4

Which Financial Statement could be prepared (check items included in each financial statement)?

#5

Will this be helpful for the insurance company to process a claim?

#6

Review Exhibit 3-8, Cost of Goods Manufactured and Cost of Goods Sold

example below..

EXHIBIT 3-12 A General Model of Cost Flows (Using Normal Costing) Raw Materials Debited for the Credited for direct cost of materials materials added to purchased Work In Process Credited for indirect materials added to Work In Process Manufacturing Debited for the Credited for the Overhead cost of direct cost of goods materials, direct manufactured labor, and Salaries and Wages Payable manufacturing overhead applied Credited for direct labor added to Work In Process Finished Goods Credited for in- direct labor added Debited for the Credited for the to Manufacturing cost of goods cost of goods Overhead manufactured sold Manufacturing Overhead Cost of Goods Sold Debited for actual Credited for over- Debited for overhead costs head cost applied the cost of incurred to Work in Process goods sold Underapplied Overapplied overhead cost overhead costEXHIBIT 3-8 Schedules of Cost of Goods Manufactured and Cost of Goods Sold Cost of Goods Manufactured Direct materials: Beginning raw materials inventory $ 7.000 Add: Purchases of raw materials ..... 60,000 Total raw materials available . ...... 67,000 Deduct Ending raw materials inventory....... . . . .... 15,000 Raw materials used in production . ..... .. .... . .. .test 52,000 Deduct: Indirect materials Included in manufacturing overhead . . .. ... 2.000 $ 50,000 Direct labor ..... . 60,000 Manufacturing overhead applied to work in process 90.000 Total manufacturing costs ... . 200,000 Add: Beginning work In process inventory...... . ... . . . . . . 30,000 230,000 Deduct: Ending work in process inventory ...... . . .. ...... 72,000 Cost of goods manufactured.... .... better.............. $ 158,000 Cost of Goods Sold Beginning finished goods inventory .. . .. .. .Free . .itis 0 Add: Cost of goods manufactured . .... .............F 158,000 Cost of goods available for sale . . . . . . .. . . ........ ..... 158,000 Deduct: Ending finished goods inventory. ... .. ... ...... 39.500 Unadjusted cost of goods sold ... . . . . . .. ...... .. 1 18,500 Add: Underapplied overhead"...... 5.000 Adjusted cost of goods sold . .... .. $123.500 "Note that the underapplied overhead is added to cost of goods sold. If overhead were overapplied, It would be deducted from cost of goods sold