Question

The Devon Motor Company produces automobiles. On April 1st the company had no beginning inventories and it purchased 6,730 batteries at a cost of $115 per battery. It withdrew 6,200 batteries from the storeroom during the month. Of these, 100 were used to replace batteries in cars being used by the company’s traveling sales staff. The remaining 6,100 batteries withdrawn from the storeroom were placed in cars being produced by the company. Of the cars in production during April, 90 percent were completed and transferred from work in process to finished goods. Of the cars completed during the month, 30 percent were unsold at April 30th.

Required:

1. Determine the cost of batteries that would appear in each of the following accounts on April 30th.

Answer 1

Answer:

Value of the inventory

Battery Purchased	6730
Less:
Battery used for the production	6200
Inventory of the batteries	530

Value of the inventory

= units in the inventory x cost

=530 x 115

=$ 60950

Cost of the inventory=$60950

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Battery used for the production =6200-100	6100
Less:
battery used for the cars being produced by the company (6100*90%)	5490
car that work in progress at month end	610

Value of Work in progress inventory

= units Work in progress inventory x cost

=610 x 115

=$ 70150

cost of battery for Work in progress inventory=$70,150

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cars being produced by the company(6100*90%)	5490
Less:
Car sold during the period(5490*70%)	3843
Finished goods of motorcycle in the inventory =5490-3843	1647

cost of finished goods in the inventory

=1647 *115

=$189,405

cost of battery in finished goods in the inventory=$189,405

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Car sold during the month =3843

= Car sold x cost per battery

=3843 *115

=441,945

Cost in cost of goods sold =$441,945

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battery used in sales saff car

=100* 115

=11,500

cost of battery used in sales person car =$11,500