Stephenson Company\'s computer system recently crashed, erasing much of the Comp

Question

Stephenson Company's computer system recently crashed, erasing much of the Company's financial data. The following accounting information was discovered soon afterwards on the CFO's back-up computer disk. Cost of Goods Sold Work-in-Process Inventory, Beginning Work-in-Process Inventory, Ending Selling and Administrative Expense Finished Good Inventory, Ending Direct Materials Purchased Factory Overhead Applied Operating Income Direct Materials Inventory, Ending Cost of Goods Manufactured Direct Labor $417,000 $32,700 $41,700 $53,400 $15,900 $177,500 $120,200 $23,500 $6,500 367,100 59,400 The CFO of Stephenson Company has asked you to recalculate the following accounts and report to him by week's end What should be the amount of direct materials available for use? $203,000 $177,500 367,100 $376,100

Explanation / Answer

Current manufacturing costs = 367100-32700+41700= 376100 Direct materials used = 376100-120200-59400= 196500 Direct materials beginning inventory = 196500-177500+6500= 25500 Direct materials available for use = 177500+25500= 203000 Option 1 is correct

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