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The cost accountant was working on the first quarter results before the
storm hit, and to his surprise, the report was still in his desk drawer.
After reviewing the data , the information shows the following
information: Material purchases were $ 325,000; Direct Labor was $
220,000. Further discussions between the controller and the cost
accountant revealed that sales were $ 1,350,000 and the gross margin
was 30% of sales. The cost accountant also discovered, while sifting
through the information, that cost of goods available for sale was $
1,020,000 at cost. While assessing the damage, the controller
determined that the prime costs were $ 545,000 up to the time of the
damage and that manufacturing overhead is 65% of conversion cost.
The cost accountant is not sure about all of this, but he decides to see
what he can do with the information.
The beginning inventory numbers are as follows:
Raw Materials, $ 41,000
Work in Process, $ 56,000
Finished Goods, $ 35,000
Required:
Determine the amount of cost in the Raw Materials, Work in Process,
and Finished Goods Inventory as of the date of the storm. ( Hint: You
may wish to reconstruct the various schedules and statements that
would have been affected by the company’s accounts during the
period.)
Grading Rubric for Case Study I:
CategoryPointsDescription
Documentation &Formatting