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

1. January 1 materials inventory = materials inventory + cost of direct material requisitioned + cost of indirect material requisitioned - cost of materials purchased = 15000+47000+8000-41000 = 29000

2. January 1 work in process inventory = work in process inventory + cost of goods complete - cost of direct material requisitioned - manufacturing overhead allocated - cost of direct labor = 36200+105000-47000-51000-(51000/1.2) = 700

3. January 1 finished goods inventory = finished inventory + cost of goods sold - cost of goods completed = 50100+74500-105000 = 19600

4. Actual manufacturing overhead incurred = Manufacturing overhead ( after allocation) + manufacturing overhead allocated = 3500+51000 = 54500

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