The accounting records of company iclude the followinginformation relating to th

Question

The accounting records of company iclude the followinginformation relating to the current year:                                                                                               Dec1              Jan1 Materialsinventory...............................................................$20,000         $25,000 Work in processinventory...................................................   37,500           40,000 Finished goods inventory,Jan1(10,000 units@ $21 perunit)..     ?               210,000 Purchases of direct materials duringyear............................... 330,000 Direct labor costs assigned toproduction.............................   375,000 Manufacturingoverhead......................................................  637,500 d. Compute the cost of inventory of finished goods at December31 of the current year, assuming that the FIFO method of inventoryis used The accounting records of company iclude the followinginformation relating to the current year:                                                                                               Dec1              Jan1 Materialsinventory...............................................................$20,000         $25,000 Work in processinventory...................................................   37,500           40,000 Finished goods inventory,Jan1(10,000 units@ $21 perunit)..     ?               210,000 Purchases of direct materials duringyear............................... 330,000 Direct labor costs assigned toproduction.............................   375,000 Manufacturingoverhead......................................................  637,500 d. Compute the cost of inventory of finished goods at December31 of the current year, assuming that the FIFO method of inventoryis used

Explanation / Answer

(d)Calculating the closing inventoryof finished goods:

Computation of Closing finished goodsinventory:

Finished goods inventory on January 1

$210,000

Cost of finished goods manufactured

$1,350,000

Less: Cost of goods sold

($1,110,000)

Finished goods inventory on December 31

$450,000

Computation of Closing finished goodsinventory:

Finished goods inventory on January 1

$210,000

Cost of finished goods manufactured

$1,350,000

Less: Cost of goods sold

($1,110,000)

Finished goods inventory on December 31

$450,000

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