Old Tyme Soda produces one flavor of a popular local soft drink. It had no work-in-process on October 31 in its only inventory account. During November, Old Tyme started 10,000 barrels. Work-in-process on November 30 is 1,200 barrels. The production supervisor estimates that the ending work-in-process inventory is 30 percent complete. An examination of Old Tyme's accounting records shows direct material costs of $18,072 and conversion costs of $20,400 for November. All production is sold as it is produced. Required: a. Compute cost of goods sold for November. b. What is the value of work-in-process inventory on November 30? c. The president tells the controller that stock analysts expect higher income for the month and asks the controller to change the production manager's estimate about the ending work-in-process inventory. (1) If the controller wanted to comply with the president's request, would he raise or lower the estimated percentage complete from the 30 percent estimate of the production supervisor? (2) What should the controller do?
Old Tyme Soda produces one flavor of a popular local soft drink. It had no work-in-process on October 31 in its only inventory account. During November, Old Tyme started 10,000 barrels. Work-in-process on November 30 is 1,200 barrels. The production supervisor estimates that the ending work-in-process inventory is 30 percent complete. An examination of Old Tyme's accounting records shows direct material costs of $18,072 and conversion costs of $20,400 for November. All production is sold as it is produced. Required: a. Compute cost of goods sold for November. b. What is the value of work-in-process inventory on November 30? c. The president tells the controller that stock analysts expect higher income for the month and asks the controller to change the production manager's estimate about the ending work-in-process inventory. (1) If the controller wanted to comply with the president's request, would he raise or lower the estimated percentage complete from the 30 percent estimate of the production supervisor? (2) What should the controller do?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 3CE: Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month...
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Hello please help with question C
Transcribed Image Text:Old Tyme Soda produces one flavor of a popular local soft drink. It had no work-in-process on October 31 in its only inventory account.
During November, Old Tyme started 10,000 barrels. Work-in-process on November 30 is 1,200 barrels. The production supervisor
estimates that the ending work-in-process inventory is 30 percent complete. An examination of Old Tyme's accounting records shows
direct material costs of $18,072 and conversion costs of $20,400 for November. All production is sold as it is produced.
Required:
a. Compute cost of goods sold for November.
b. What is the value of work-in-process inventory on November 30?
c. The president tells the controller that stock analysts expect higher income for the month and asks the controller to change the
production manager's estimate about the ending work-in-process inventory.
(1) If the controller wanted to comply with the president's request, would he raise or lower the estimated percentage complete from
the 30 percent estimate of the production supervisor?
(2) What should the controller do?
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