COST ACCOUNTING
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ISBN: 9781323927397
Author: Pearson
Publisher: PEARSON
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Chapter 2, Problem 2.44P
Missing records, computing inventory costs. Ron Howard recently took over as the controller of Johnson Brothers Manufacturing. Last month, the previous controller left the company with little notice and left the accounting records in disarray. Ron needs the ending inventory balances to report first-quarter numbers.
For the previous month (March 2017) Ron was able to piece together the following information:
| Direct materials purchased | $120,000 |
| Work-in-process inventory, 3/1/2017 | $ 35,000 |
| Direct materials inventory, 3/1/2017 | $ 12,500 |
| Finished-goods inventory, 3/1/2017 | $160,000 |
| Conversion costs | $330,000 |
| Total |
$420,000 |
| Cost of goods manufactured | 4 times direct materials used |
| Gross margin as a percentage of revenues | 20% |
| Revenues | $518,750 |
Calculate the cost of:
- 1. Finished-goods inventory, 3/31/2017
Required
- 2. Work-in-process inventory, 3/31/2017
- 3. Direct materials inventory, 3/31/2017
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Ron Howard recently took over as the controller of Johnson Brothers Manufacturing. Last month, the previous controller left the company with little notice and left the accounting records in disarray. Ron needs the ending inventory balances to report first-quarter numbers. For the previous month (March 2017) Ron was able to piece together the following information:Direct materials purchased $120,000
Work-in-process inventory, 3/1/2017 $ 35,000
Direct materials inventory, 3/1/2017 $ 12,500
Finished-goods inventory, 3/1/2017 $160,000
Conversion costs $330,000
Total manufacturing costs added during the period $420,000
Cost of goods manufactured 4 times direct materials used
Gross margin as a percentage of revenues 20%
Revenues $518,750
Calculate the cost of:
1. Finished-goods inventory, 3/31/2017
2. Work-in-process inventory, 3/31/2017
3. Direct materials inventory, 3/31/2017
Jack Jones, the materials manager at Precision Enterprises,is beginning to look for ways to reduce inventories. A re-cent accounting statement shows the following inventoryinvestment by category: raw materials, $3,129,500; work-in-process, $6,237,000; and finished goods, $2,686,500.This year’s cost of goods sold will be about $32.5 mil-lion. Assuming 52 business weeks per year, express totalinventory asa. Weeks of supplyb. Inventory turns
Martinez Corporation’s retail store and warehouse closed for an entire weekend while the year-end inventory was counted. When the count was finished, the controller gathered all the count books and information from the clerical staff, completed the ending inventory calculations, and prepared the following partial income statement for the general manager for Monday morning:
Sales
$
2,752,000
Beginning inventory
$
641,000
Purchases
1,550,000
Total goods available for sale
2,191,000
Less ending inventory
641,000
Cost of goods sold
1,550,000
Gross profit
$
1,202,000
The general manager called the controller into her office after quickly reviewing the preliminary statements. “You’ve made an error in the inventory,” she stated. “My pricing all year has been carefully controlled to provide a gross profit of 35%, and I know the sales are correct.”(a)How much should the ending inventory have been?…
Chapter 2 Solutions
COST ACCOUNTING
Ch. 2 - Define cost object and give three examples.Ch. 2 - Define direct costs and indirect costs.Ch. 2 - Prob. 2.3QCh. 2 - Name three factors that will affect the...Ch. 2 - Define variable cost and fixed cost. Give an...Ch. 2 - What is a cost driver? Give one example.Ch. 2 - What is the relevant range? What role does the...Ch. 2 - Explain why unit costs must often be interpreted...Ch. 2 - Prob. 2.9QCh. 2 - What are three different types of inventory that...
Ch. 2 - Distinguish between inventoriable costs and period...Ch. 2 - Define the following: direct material costs,...Ch. 2 - Describe the overtime-premium and idle-time...Ch. 2 - Define product cost. Describe three different...Ch. 2 - What are three common features of cost accounting...Ch. 2 - Prob. 2.16MCQCh. 2 - Comprehensive Care Nursing Home is required by...Ch. 2 - Frisco Corporation is analyzing its fixed and...Ch. 2 - Year 1 financial data for the ABC Company is as...Ch. 2 - The following information was extracted from the...Ch. 2 - Computing and interpreting manufacturing unit...Ch. 2 - Direct, indirect, fixed, and variable costs....Ch. 2 - Classification of costs, service sector. Market...Ch. 2 - Classification of costs, merchandising sector....Ch. 2 - Classification of costs, manufacturing sector. The...Ch. 2 - Variable costs, fixed costs, total costs. Bridget...Ch. 2 - Variable and Fixed Costs. Consolidated Motors...Ch. 2 - Variable costs, fixed costs, relevant range. Gummy...Ch. 2 - Prob. 2.29ECh. 2 - Cost drivers and functions. The representative...Ch. 2 - Total costs and unit costs, service setting....Ch. 2 - Total and unit cost, decision making. Gayles...Ch. 2 - Inventoriable costs versus period costs. Each of...Ch. 2 - Computing cost of goods purchased and cost of...Ch. 2 - Cost of goods purchased, cost of goods sold, and...Ch. 2 - Flow of Inventoriable Costs. Renkas Heaters...Ch. 2 - Cost of goods manufactured, income statement,...Ch. 2 - Cost of goods manufactured, income statement,...Ch. 2 - Income statement and schedule of cost of goods...Ch. 2 - Interpretation of statements (continuation of...Ch. 2 - Income statement and schedule of cost of goods...Ch. 2 - Terminology, interpretation of statements...Ch. 2 - Labor cost, overtime, and idle time. David...Ch. 2 - Missing records, computing inventory costs. Ron...Ch. 2 - Comprehensive problem on unit costs, product...Ch. 2 - Prob. 2.46PCh. 2 - Cost classification; ethics. Paul Howard, the new...Ch. 2 - Prob. 2.48P
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