X Company had the following inventories at the beginning of the year: Raw Materi

Question

X Company had the following inventories at the beginning of the year:
Raw Materials, $10,000
Work-in Process, $25,000
Finished Goods, $30,000
It had following transactions during the year. The company uses a predetermined manufacturing overhead rate of 60% of direct labor cost.
1. Purchased raw materials costing $200,000.
2. Put raw materials costing $195,000 into production.
3. Wages of employees that worked directly on products was $350,000
4. The wages of factory supervisors and factory maintenance employees was $150,000.
5. Advertising, insurance on sales person's car's sales salaries totaled $120,000.
6. Depreciation of factory equipment was $50,000.
7. The cost of goods completed during the year was $700,000.

8. The company sold products for $900,000 that had cost $680,000 to manufacture.

What is the Finished Goods Inventory on December 31?

Explanation / Answer

Calculate finished goods inventory on december 31 :

Finished goods inventory on december 31 = $50000

Beginning finished goods 30000 Add: Cost of goods manufactured 700000 Total cost of goods available for sale 730000 Less: Cost of goods sold -680000 Ending finished goods inventory 50000

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