Question

Tierney Company begins operations on April 1. Information from job cost sheets shows the following.
Manufacturing Costs Assigned
Job Number April May June Completed
10 $5,200 $4,400 May
11 4,100 3,900 $2,000 June
12 1,200 April
13 4,700 4,500 June
14 5,900 3,600 Not complete


Job 12 was completed in April. Job 10 was completed in May. Jobs 11 and 13 were completed in June. Each job was sold for 25% above its cost in the month following completion.

Instructions
a. What is the balance in Work in Process Inventory at the end of each month?
b. What is the balance in Finished Goods Inventory at the end of each month?
c. What is the gross profit for May, June, and July?

Answer 1

1. Ending work in process inventory    

Work in process are those items that are still being processed under factory and not complete.

Job 10 and 11 are pending in April

Job 11, 13 and 14 are pending in May

Job 14 is incomplete at June end

April (5200 +4100)	9,300
May (4100 + 3900 + 4700 + 5900)	18,600
June ( 5900 +3600)	9,500
Ending work in process inventory	37,400

2. Finished goods

Finished goods are 100% complete in respect of materials and labor and can be sold. Since they are sold in following month, current month inventory would not end up in next month inventory.

Job 12 is complete in April

Job 10 is complete in May

Job 11 and 13 are complete in June

April	1200
May (5200 + 4400)	9600
June (4100 + 3900 +2000 + 4700 +4500)	19,200
Finished goods	30,000

3. Gross profit

Gross profits are computed on finished goods sold as:

April (1200 X 0.25)	300
May (9600 * 0.25)	2400
June (19200 X 0.25)	4800
Finished goods	7500