Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files:
Cost of goods sold: $87,500
Work in process inventory, January 1, 2016: 21,500
Work in process inventory, December 31, 2016: 17,000
Selling and Administrative Expenses: 20,000
Net Income: 35,000
Factory overhead: 21,500
Direct materials inventory, January 1, 2016: 28,000
Direct materials inventory, December 31, 2016: 15,250
Cost of goods manufactured: 106,500
Finished goods inventory, January 1, 2016: 35,250
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The CFO of Tierney Construction, Inc. has asked you to recalculate the following accounts and to report to him by the end of tomorrow.
What should be the amount of direct materials purchased?
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead
Factory overhead = $21,500
Direct labor cost = Factory overhead x 2.5
= 21,500 x 2.5
= $53,750
Cost of goods manufactured = Direct materials inventory, January 1, 2016 + Direct materials purchase - Direct materials inventory, December 31, 2016 + Direct labor cost + Factory overhead + Work in process inventory, January 1, 2016 - Work in process inventory, December 31, 2016
106,500 = 28,000 + Direct materials purchase - 15,250 + 53,750 + 21,500 + 21,500 - 17,000
Direct materials purchase = $14,000
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Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The...
Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files: Cost of goods sold Work in process inventory, January 1, 2016 Work in process inventory, December 31, 2016 Selling and Administrative Expenses Net Income Factory overhead Direct materials inventory, January 1, 2016 Direct materials inventory, December 31, 2016 Cost of goods manufactured Finished goods inventory, January 1, 2016 $80,750 18,800 14,750 16,400 30,500 20,150 26,200 14,125...
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