Question

Exercise 1-12 Product and Period Cost Flows [LO1-3]

The Devon Motor Company produces automobiles. On April 1st the company had no beginning inventories and it purchased 6,620 batteries at a cost of $110 per battery. It withdrew 6,100 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 The remaining 6,000 batteries withdrawn from the storeroom were placed in cars being produced by the company.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.

raw material?

work in process?

finished goods?

cost of goods sold?

selling expenses?

Answer 1

Beginning Inventory number			0
Add: Purchase units			6620
Total Units			6620
Less: Withdrawals			6100
Raw material inventory			520
Used as Selling oh			100
Remaining used in production			6000
10% left as WIP			600
Transferred to FG			5400
Unsold units 30%			1620
Units Sold (5400-1620)			3780
Raw material 520 units @ 110 =				57200
Selling overheads = 100 units @110 =				11000
Work in process inventory (600units @110)=				66000
Finished Goods inventory (1620 units @110)=				178200
Cost of goods sold (3780 units @110)=				415800

Answer 2

Exercise 1-12 Product and Period Cost Flows [LO1-3]

The Devon Motor Company produces automobiles. On April 1st the company had no beginning inventories and it purchased 6,620 batteries at a cost of $110 per battery. It withdrew 6,100 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 The remaining 6,000 batteries withdrawn from the storeroom were placed in cars being produced by the company.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.

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

Beginning   Inventory number				0
Add: Purchase units				6620
Total Units				6620
Less: Withdrawals				6100
Raw material   inventory				520
Used as Selling oh				100
Remaining used in   production				6000
10% left as WIP				600
Transferred to FG				5400
Unsold units 30%				1620
Units Sold   (5400-1620)				3780
Raw material 520   units @ 110 =				57200
Selling overheads =   100 units @110 =				11000
Work in process   inventory (600units @110)=				66000
Finished Goods   inventory (1620 units @110)=				178200
Cost of goods sold   (3780 units @110)=				415800