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 $32,200 dr.
Finished good inventory $50,100 dr.
Manufacturing overhead (after allocation) $3,500 dr.
Cost of good 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

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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