Unique displays designs and manufactures displays used in mobile devices. Serious flooding throughout the region affected unique displays' facilities. Inventory was completely ruined, and the companies computer system, including all accounting records, I was destroyed. The beginning inventory numbers are as follows: Raw materials $75,000
Work in process $226,000
Finished goods $213,000
He remembers several schedules he learned in college that may help him get started.
Before the disaster recovery specialists clean the buildings, Louise Ditchey, the company controller, is anxious to salvage whatever records she can to support an insurance claim for the destroyed inventory. She is standing in what is left of the Accounting Department wtih Trent Parker, the cost accountant.
"I didn't know mud could smell so bad," Trent says. "What should I be looking for?" "Don't worry about beginning inventory numbers," responds Louise. "We'll get them from last year's annual report. We need first-quarter cost data."
"I was working on the first quarter results just before the storm hit," Trent says. "Look, my my desk drawer. But all I can make out is that for the first quarter, material purchases were $533,000 and that direct labor, manufacturing overhead (other than indirect materials), and total manufacturing costs to account for were $551,000; $218,000; and $1,491,000, respectively. Wait, and cost of goods available for sale was $1,615,000."
"Great," says Louise. "I remember that sales for the period were approximately $1.8 million. Given our gross profit of 30%, that's all you should need." Trent is not sure about that, but decides to see what he can do with this information.
Start by determining the ending inventory of raw materials by calculating the direct materials used.
Unique Displays
Calculation of Direct Materials Used
For Current Year
Beginning raw materials inventory 75000
Plus: Purchases of direct materials 533000
Direct materials available for use 608000
Less: Ending raw materials inventory
Direct materials used Requirement:
Determine the ending inventory of raw materials, work in process, and finished goods. Assume that role materials inventory contains only direct materials.
Requirement:
Determine the ending inventory of raw materials, work in process, and finished goods. Assume that role materials inventory contains only direct materials.