Rodman Company has the following balances as of December 31, 20X7. Materials inv

Question

Rodman Company has the following balances as of December 31, 20X7.

Materials inventory $ 15,000 dr.

Work in process inventory 36,200 dr.

Finished goods inventory 50,100 dr.

Manufacturing overhead (after allocation) 3,500 dr.

Cost of goods sold 74,500 dr.

Additional information is as follows:

Cost of materials purchased during 20X7 $ 41,000

Cost of direct materials requisitioned in 20X7 47,000

Cost of indirect materials requisitioned in 20X7 8,000

Cost of goods completed in 20X7 105,000

Manufacturing overhead allocated (120% of direct labor) 51,000

Required:

a) January 1, 20X7, materials inventory

b) January 1, 20X7, work in process inventory

c) January 1, 20X7, finished goods inventory

d) Actual manufacturing overhead incurred

Explanation / Answer

Initial = Dec31 20x7
Final = Jan01 20x7

Initial Material Inventory = Final material inventory + Out flow of material - purchase of materials during the period

Final material inventory = 15000
Purchase of material = 41000

Out flow from materials inventory =
cost of goods completed = material cost + overhead
material cost = 105000 - 51000 = 54000

Material outflow = 54000

So initial material inventory = final + outflow - purchase
= 15000 + 54000 - 41000
= 28000

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