Question

Return to question Running Data began operations on February 1. The company produces GPS watches designed for runners. On February 15, the company purchased 2,900 DVD discs to include with each running watch it sells. The DVD is preloaded with product setup information, an instruction manual including video examples, and warranty details. Each disc cost Running Data $5. During February, 300 discs were taken from the raw materials inventory of these, 110 were taken by the sales manager to sales meetings with prospective retailers to carry the watches and handed out as advertising. The remaining discs were included with the GPS watches that were being manufactured in February. Of the watches that were bundled with the discs during May 60% were completed and transferred from work in process to finished goods of the watches completed during the month, 50% were sold and shipped to customers. Required: 1. Determine the cost of discs that would be in each of the following accounts at February 28. Cost of Discs a. Raw Materials b. Work in Process c. Finished Goods d. Cost of Goods Sold e Advertising Expense < Prey 3 of 4 Next > ledes oder gringowe Restora W en acer

Answer 1

(1)There will be no beginning goods as it began its operation from february.

raw material in inventory on February 28=discs purchased during month- disc transferred to production department

=2900-300

=2600 discs

cost of raw material = 2600*$5

=$13000

(2)Work in process

discs taken to production = 300-110 given as advertisement

=190discs

60% completed and transferred to finished goods department

40% in process

=190discs *40% in process

=76 dics

cost of work in process =76*$5

=380$

(3)finished goods

goods completed-goods sold

goods completed=190*60%

=114discs

goods sold = 114*50%

=57

Finished goods=114-57 =57discs

cost of finished goods= 57*5$

=285$

(4)cost of goods sold

=goods sold*cost per dics

=57*5

=285$

(5) advertising expnese

=110discs*$5

=550$

The following accounts will be shown under balance sheet(They are current assets for the company)

• Finished Goods
• Work in process
• raw material

The following accounts will be shown under Income statement (They are cost for the company)

• advertising expense
• cost of goods sold