Question

Costs and Balances

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
Decrease in materials inventory	$3,000
Materials inventory on Feb. 28	50% of materials inventory on Jan. 31
Direct materials purchased	$12,300
Direct materials used	3 times the direct labor incurred
Total manufacturing costs incurred in period	$27,300
Total manufacturing costs incurred in period	70% of Cost of Goods Manufactured
Total manufacturing costs incurred in period	$9,000 less than Cost of Goods Sold

	Account Balances
Account	Jan. 31	Feb. 28	Costs Incurred
Materials Inventory	$	$	Direct Materials Used	$
Work in Process Inventory	21,000		Direct Labor Incurred
Finished Goods Inventory		16,500	Factory Overhead Incurred
			Cost of Goods Sold

Answer 1

Calculation of Beginning material Inventory be X X-0.5X =3000 0.5X =3000 X=3000/0.5 =6000 Beginning material inventory $ 6,000 Ending material inventory $ 3,000 6000*0.5 Direct material used $ 15,300 6000+12300-3000 Direct labour incurred $ 5,100 15300/3 Factory Overhead incurred $ 6,900 27300-15300-5100 Cost of goods manufactured $ 39,000 27300/70% Ending work in process $ 9,300 (21000+27300-39000) Cost of good sold $ 34,300 7000+27300 Beginning Finished goods Inventory 11,800 34300-39000+16500 Accounts Raw materials Inventory Work In process Inventory Finished Goods Inventory jan 31 Feb28 $ 6,000 $ $ 21,000 $ $ 11,800 $ 3,000 9,300 16,500 Cost Incurred Direct materials used Direct labour incurred Factory overhead incurred Cost of good sold $ $ $ 15,300 5.100 6,900 34,300