Question

fatmata tunay Week 4 Flow of Costs due Sept 16 (1) . Protected View . Saved. e Search n Layout References Mailings Review View Help Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View Enable Editing redentials are out of date. Please sign in as turayfomail.uc.edu so we can verify your subscription Sign In It would really benefit you if you reviewed the handout and watched Video #1 (Flow of Costs) from the Chapters 2 and 3 Module. Hawkins Motor Company manufactures cars. There was no beginning inventory in Raw Materials, Work in Process, or Finished Goods on September 1. During September, the company purchased 10,000 batteries at a cost of $50 per battery ($500,000). During September, Hawkins withdrew 8,000 batteries from the warehouse during the month. Of these, 500 were used to replace the batteries in the cars used by traveling sales staff. The remaining 7.500 batteries were put into cars manufactured during the month. Of the cars put into production during September, 75% were completed and transferred to the company's storage lot. Of the cars completed during the month, 80% were sold by September 30th Required Determine the cost of the batteries that would appear in each of the following accounts at September 30th Please note that the five categories should add up to $500,000 which is 10,000 batteries at $50 per battery. Your answer should be in dollars, not in batteries. I did the Selling Expense for you. Raw Materials Inventory Work in Process Inventory Finished Goods Inventory Cost of Goods Sold Selling Expense Total cost 500 x $50 = $25,000 $500,000 D.Focus о в ер

Answer 1

Since we do not have any opening inventory of Raw Material, WIP or Finished Goods as on September 1st, Lets assume that the no. of cars in production is equal to the number of batteries put in the cars under production i.e. 7500 cars were in production during the month.

Total no. of batteries purchased in beginning of september = 10000 @ $50 each

I. Out of it 8000 were withdrawn and put to use thus, remaining batteries in Raw material in terms of batteries will be = 2000 batteries i.e. $1,00,000 (2000*$50)

II. Out of 8000 batteries, 500 batteries were used in repairing the car used by the sales team. The cost is shown as selling expense in the table above = $25,000 (500 * $50)

75% cars were completed during the month i.e. 5625 (7500*75%) cars were manufactured. Thus, 1875 (7500*25%) were in W.I.P as on September 30th. Therefore;

III. W.I.P inventory in terms of batteries would be = $93,750 (1875 * $50)

Out of 5625 cars produced, 80% were sold i.e. 4500 (5625 * 80%) cars were sold. Remaining Finished Goods Inventory would then be 1125 (5625 - 4500) cars. Therefore;

IV. Finished Goods Invetory in terms of batteries would be = $56,250 (1125 * $50) and;

V.    Cost of Goods Sold in terms of batteries will come out to be = $2,25,000 (4500 * $50)

Putting all of these in the required table -

Raw Material Inventory (Refer point I.) $100,000

Work in Process Inventory (Refer point III.) $ 93,750

Finished Goods Inventory (Refer point IV.) $ 56,250

Cost of Goods Sold (Refer point V.) $2,25,000

Selling Expenses (Refer point II. and as already Given) $ 25,000

Total Cost $5,00,000