COLORADO CORPORATION

On October $27,2011,$ a freak snowstorm destroyed the work$-$in$-$process of the company, who promptly filed a claim with their insurance company for the lost work$-$in$-$process inventory, and raw materials inventory which were in the factory. Luckily, the finished goods are kept at a separate warehouse location, which was not damaged by the storm. Only one job, Job Beta, was in the finished goods inventory As is normal, they put in a claim for lost profits as a result of the damage.

You have been sent to the scene on behalf of the insurance company to audit the claim being made by company. The company claims that the cost of work$-$in$-$process inventory destroyed by the storm was $$50,000,$ and the cost of raw materials was $$175,000.$

From your conversations with factory personnel, you discover that the company was in process of manufacturing two custom jobs, Alpha and Gamma, both of which were started during $2011.$ Further discussion with the warehouse supervisor revealed that there was one job, Beta, complete and in the warehouse awaiting shipment at the time of the storm.

While the company's onsite accounting records were destroyed, you were able to get the following information from off$-$site backup records, and through interviewing company horsonnel:

a$)$ The company applies overhead at the rate of $85\%$ of direct labor cost.

b$)$ Cost of goods sold averages $75\%$ of the company's selling price.

c$)$ Sales to date as of the date of the storm totaled $$1,598,000.$

d$)$ The company pays its factory workers a rate of $$12\mathrm{.}90$ per hour. A total of $25,760$ direct labor hours were used during the year.

e$)$ Raw materials purchased year to date totaled $$843,276.$

f$)$ Total costs of job Beta amounted to $$165,600.$

Job cost records for Alpha and Gamma showed the following:

$\backslash$table$[[,$Alpha,Gamma$],[$Direct materials,$$21,980,$$$14,700$