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At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he’s collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured.
Data for February
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Question & Answer: At the end of February, after the second month of operation…..
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| Decrease in materials inventory | 2700 |
| materials inventory on feb 28 | 50% of materials inventory on jan 31 |
| direct materials purchaced | 12000 |
| direct materials used | 3 tiems the direct labor incurred |
| TMC incurred in period | 28000 |
| TMC incurred in period | 70% of Cost of Goods Manufactured |
| TMC inccurred in period | 8000 less than Cost of goods sold |
| Account | Jan 31 | Feb 28 | |
| Materials Inventory | _________ | ____________ | |
| Work in process inventory | 27,000 | __________ | |
| Finshed goods Inventory | _________ | 16,000 |
Cost Incurred
| Direct Materials Used | ________________ |
| Direct Labor Incurred | _________ |
| Factory Overhead Incurred | __________ |
| Factory Overhead Incrred | __________ |
| Cots of goods Sold | _________ |
Expert Answer
| Let Cost of goods manufactured be x | ||
| TMC=70%*X | ||
| 28000=70%*X | ||
| Cost of good manufactured | 40000 | |
| (28000/.7) | ||
| Work iN Process , Jan 31 | 27000 | |
| Add: Total manufacturig cost | 28000 | |
| 55000 | ||
| Work iN Process , Feb 28 | 15000 | |
| (55000-15000) | ||
| Cost of good manufactured | 40000 | |
| Cost of Good sold | ||
| Finsihed Goods Inventory, Jan 31 (64000-40000) | 24000 | |
| Cost of good manufactured | 40000 | |
| Cost of good available for sale (48000+16000) | 64000 | |
| Less: Finsished Goods Inventory, Feb 28 | 16000 | |
| Cost of Good sold (40000+8000) | 48000 | |
| Opening Material inventory be I | ||
| ending Material inventory be .5i | ||
| i-.5i=2700 | ||
| i=2700/.5 | 5400 | |
| Material Inventory, Jan 31 | 5400 | |
| Add: Purchases | 12000 | |
| Material available | 17400 | |
| Less: ending inevntory (5400*.5) | 2700 | |
| Direct material used | 14700 | |
| Direct labor 14700/3 | 4900 | |
| Factory overhead (40000-14700-4900) | 20400 | |
| ans | ||
| Account | 31-Jan | 28-Feb |
| Materials Inventory | 5400 | 2700 |
| Work in process inventory | 27,000 | 15000 |
| Finshed goods Inventory | 24000 | 16,000 |
| Cost Incurred | ||
| Direct Materials Used | 14700 | |
| Direct Labor Incurred | 4900 | |
| Factory Overhead Incurred | 20400 | |
| Factory Overhead Incrred | 20400 | |
| Cots of goods Sold | 48000 |
