ADM 2341 Managerial Accounting Fall 2009

Ch 2 Capstone Problem HALDIMAND MANUFACTURING COMPANY

The managerial accountants at HALDIMAND Manufacturing Company were in the process of preparing the statement of cost of goods manufactured and sold for

the year ended December 31, 2008, when a fire in the accounting office destroyed all of the information relating to the credits associated with the inventory

accounts. Fortunately, the debit information was available and is listed below.

Purchases of direct materials

$140,000

Total manufacturing costs incurred

550,000

Cost of goods manufactured

600,000

Cost of goods sold

650,000

Direct materials inventory

$35,000

Work in process inventory

75,000

Finished goods inventory

175,000

While the debit information is useful, Leslie, one of the older and wiser managerial accountants, reminded everyone that this was insufficient to prepare a

statement of cost of goods sold. Nicky, a recently hired managerial accountant finally realized that he was sitting on some important data, last years annual report

for 2007. He realized that the inventory values would be on the balance sheet. Nicky opened the report and read the balance sheet information relating to

inventories. The inventory values for December 31,

2007

, are listed below:

Direct materials inventory

$35,000

Work in process inventory

75,000

Finished goods inventory

175,000

Leslie, the old and wise managerial accountant, again reminded the staff that this was insufficient data to prepare a statement of cost of goods sold. Nicky, the

recently hired managerial accountant, had been working on the manufacturing costs for 2008 and remembered that direct labour amounted to 36 percent of the

total manufacturing costs incurred and was 80 percent of the manufacturing overhead costs. Leslie smiled and said: This might be sufficient information to

prepare the statement of cost of goods sold. Nicky said What about the ending inventory values? Leslie responded You can calculate th