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 35,200 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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