Question

On November 30, 2020, there was a fire in the factory of Able Manufacturing Limited, where you work as the controller. The work in process inventory was completely destroyed, but both the materials and finished goods inventories were undamaged. Able uses normal job-order costing and its fiscal year end is December 31. Selected information for the periods ended October 31, 2020, and November 30, 2020, follows: October 31, 2020 November 30, 2020 $73,350 Supplies (including both direct and indirect materials) Work in process inventory Finished goods inventory Cost of goods sold (year to date) Accounts payable (relates to materials purchased only) Manufacturing overhead incurred (year to date) Manufacturing overhead applied Other information for November 2020: Cash payments to suppliers Payroll (including $16,370 indirect) Indirect materials used Over-applied overhead (during November only) $79,950 59,775 59,200 574,000 18,960 130,500 128,800 63,500 665,200 54,080 172,300 $59,200 84,000 5,870 2,780 Calculate the normal cost of the work in process inventory lost during the fire. Cost of the work in process inventory 193775

Answer 1

Solution:

Direct Materials Used
Accounts payable an on Nov 30, 2020	54080
Add: Payment made to suppliers	59200
Less: Accounts payable an on Oct 31, 2020	18960
Supplies Purchased during November	94320
Add: Supplies as on Oct 31, 2020	79950
Less: Supplies as on Nov 30, 2020	73350
Supplies Consumed during November	100920
Less: Indirect Materials Used	5870
Direct Materials Used	95050
Manufacturing Overhead Applied
Manufacturing Overhead Upto Nov 30, 2020	172300
Less: Manufacturing Overhead Upto Oct 31, 2020	130500
Manufacturing Overhead incurred during Nov	41800
Add: Overhead Overapplied	2780
Manufacturing Overhead Applied during Nov	44580
Cost of Goods sold
Direct Materials	95050
Direct labor (84000- 16370)	67630
Manufacturing Overhead Applied	44580
Add: WIP Inventory as on Oct 31, 2020	59775
Less: WIP Inventory as on Nov 30, 2020	0
Cost of Goods Manufactured during November	267035
Add: Finished Goods inventory Oct 31, 2020	59200
Less: Finished Goods inventory Nov 30, 2020	63500
Cost of Goods sold during November	262735
Cost of Work in process inventory Lost during Fire
Cost of Goods sold during November	262735
Add: Cost of Goods sold upto Oct 31, 2020	574000
Less: Cost of goods sold upto Nov 30, 2020	665200
Cost of Work in process inventory Lost during Fire	171535