Inventory Valuation

1. You are engaged in an audit of Roche Mfg. Company for the year ended December 31, 2019. To reduce the workload at year-end, Roche took its annual physical inventory under your observation on November 30, 2019. Roche's inventory account, which includes raw materials and work in process, is on a perpetual basis, and it uses the first-in, first-out method of pricing. It has no finished goods inventory. The company's physical inventory revealed that the book inventory of $61,830 was understated by $2,720. To avoid distorting the interim financial statements, Roche decided not to adjust the book inventory until year-end except for obsolete inventory items. Your audit revealed this information about the November 30 inventory:

   • Pricing tests showed that the physical inventory was overpriced by $1,310.
   • Footing and extension errors resulted in a $130 understatement of the physical inventory.
   • Direct labor included in the physical inventory amounted to $9,040. Overhead was included at the rate of 200% of direct labor. You determined that the amount of direct labor was correct and the overhead rate was proper.
   • The physical inventory included obsolete materials recorded at $300. During December, these materials were removed from the inventory account by a charge to cost of sales.

   Your audit also disclosed the following information about the December 31, 2019, inventory.

   • Total debits to certain accounts during December are:

     		December
     Purchases		$25,260
     Direct labor		11,120
     Manufacturing overhead expense		25,860
     Cost of sales		74,710

   • The cost of sales of $74,710 included direct labor of $12,680.
   • Normal scrap loss on established product lines is negligible. However, a special order started and completed during December had excessive scrap loss of $780 which was charged to Manufacturing Overhead Expense.

   Required:

   1. Compute the correct amount of the physical inventory at November 30, 2019.

   Inventory per books			$fill in the blank 10240dfd3f84061_1
   			fill in the blank 10240dfd3f84061_3
   Physical inventory, per client			$fill in the blank 10240dfd3f84061_4
   			fill in the blank 10240dfd3f84061_6
   Total			$fill in the blank 10240dfd3f84061_7
   	$fill in the blank 10240dfd3f84061_9
   	fill in the blank 10240dfd3f84061_11		fill in the blank 10240dfd3f84061_12
   Corrected physical inventory at November 30, 2019			$fill in the blank 10240dfd3f84061_13

   2. Without prejudice to your solution to Requirement 1, assume that the correct amount of the inventory at November 30, 2019, was $55,670. Compute the amount of the inventory at December 31, 2019.

   Corrected physical inventory at November 30			$fill in the blank f603fefd207ef9f_1
   		$fill in the blank f603fefd207ef9f_3
   		fill in the blank f603fefd207ef9f_5	fill in the blank f603fefd207ef9f_6
   Inventory of materials at November 30			$fill in the blank f603fefd207ef9f_7
   			fill in the blank f603fefd207ef9f_9
   Total material available			$fill in the blank f603fefd207ef9f_10
   		$fill in the blank f603fefd207ef9f_12
   	$fill in the blank f603fefd207ef9f_14
   	fill in the blank f603fefd207ef9f_16	fill in the blank f603fefd207ef9f_17
   Total		$fill in the blank f603fefd207ef9f_18
   		fill in the blank f603fefd207ef9f_20
   Total		$fill in the blank f603fefd207ef9f_21
   		fill in the blank f603fefd207ef9f_23	fill in the blank f603fefd207ef9f_24
   Materials inventory at December 31			$fill in the blank f603fefd207ef9f_25
   		$fill in the blank f603fefd207ef9f_27
   		fill in the blank f603fefd207ef9f_29	fill in the blank f603fefd207ef9f_30
   Inventory at December 31, 2019			$fill in the blank f603fefd207ef9f_31