Question

The Devon Motor Company produces automobiles. On April 1st the company had no beginning inventories and it purchased 8,000 batteries at a cost of $80 per battery. It withdrew 7,600 batteries from the storeroom during the month. Of these, 100 were used to replace batteries in cars being used by the company's traveling sales staff. The remaining 7,500 batteries withdrawn from the storeroom were placed in cars being produced by the company. Of the cars in production during April, 90 percent were completed and transferred from work in process to finished goods. Of the cars completed during the month, 30 percent were unsold at April 30th. Required: 1. Determine the cost of batteries that would appear in each of the following accounts on April 30th. Cost Name of the Account 1a. Raw Materials 1b. Work in Process 10. Finished Goods 1d. Cost of Goods Sold 1e. Selling Expense

Answer 1

Solution

Name of account
Raw material	$    32,000.00
Work in process	$    60,000.00
Finished goods	$ 162,000.00
Cost of goods sold	$ 378,000.00
Selling expenses	$      8,000.00

Working

		Raw material	Work in process	Finished goods	Cost of goods sold	Selling expenses
Batteries purchased		8000
Transferred to production and sales department		-7600	7500			100
Balance		400	7500	0	0	100
Transferred to finished goods			-6750	6750
Balance		400	750	6750	0	100
Transferred to cost of goods sold				-4725	4725
Balance		400	750	2025	4725	100
Cost per battery		$            80.00	$          80.00	$            80.00	$            80.00	$        80.00
Total cost assigned		$    32,000.00	$ 60,000.00	$ 162,000.00	$ 378,000.00	$ 8,000.00