Students may simply use the $208,400 cost of goods sold computation from E 2-42B, rather than repeating the details of the computation here. (25 min.) E 2-44B Instructional note: This is a fairly challenging exercise that requires students to work backwards through financial statement elements. a. Revenues $27,900 Cost of goods sold 15,500 profit $12,400 b. To determine beginning raw materials inventory, with the materials used computation and work backwards: Beginning raw materials inventory $ 2,400 Purchases of direct materials 9,600 Available for use 12,000 Ending raw materials inventory (3,500) Direct materials used $ 8,500 c. To determine ending finished goods inventory, start by computing the cost of goods manufactured: Beginning work in process inventory $ 0 Direct materials used $8,500 Direct labor 3,400 Manufacturing overhead 6,300 18,200 Total manufacturing costs to account for 18,200 Ending work in process inventory (1,000) Cost of goods manufactured $17,200 Now use the cost of goods sold computation to determine ending finished goods inventory: Beginning finished goods inventory $ 4,900 Cost of goods manufactured (from above) 17,200 Cost of goods available for sale 22,100 Ending finished goods inventory (6,600) Cost of sold (from part A) $15,500 (15-20 min.) E 2-45B a. Fuel economy when purchasing new trucks for the delivery fleet Relevant. b. Real estate property tax when selecting the location for a new order processing center Relevant c. The purchase of the old computer when replacing it with a new computer with improved features Irrelevant d. The average cost of vehicle operation when purchasing a new delivery van Relevant e. The original cost of the current stove when selecting a new, more efficient stove for a restaurant Irrelevant f. The fair market value (trade-in value) of the existing forklift when deciding whether to replace it with a new, more efficient model Relevant
Req. 1 The ending inventory costs derived from the following schedule are: Raw materials $143,000, Work in process $239,000, and Finished goods $150,000. PowerBox Inventory Reconstruction Schedule Raw materials inventory Work in Process Inventory Finished Goods Inventory Beginning inventory $113,000 (G) Beginning Inventory $ 229,000 (G) Beginning inventory $ 154,000 (G) + Purchases 476,000 (G) + Direct Materials Used 446,000e + Cost of goods manufactured 1,186,000c + Direct labor 505,000 (G) + Manufacturing Overhead 245,000 (G) = Direct Materials available for use 589,000 = Total manufacturing costs to account for 1,425,000 (G) = Cost of goods available for sale 1,340,000 (G) − Ending inventory 143,000f − Ending inventory 239,000d − Ending inventory 150,000b = Direct Materials used $446,000e = Cost of goods manufactured $1,186,000c = Cost of goods Sold $1,190,000a (G) = Amount given in the case. aCost of good sold: × (1 − profit %) = Cost of goods sold $1,700,000 × 70% = $1,190,000 bEnding finished goods inventory: Cost of goods available for sale − Ending finished inventory = Cost of goods sold $1,340,000 − Ending finished goods inventory = $1,190,000 Ending finished goods inventory = $ 150,000 cCost of goods manufactured: Beginning finished goods inventory + Cost of goods manufactured = Cost of goods available for sale $154,000 + Cost of goods manufactured = $1,340,000 Cost of goods manufactured = $1,186,000 dEnding work in process inventory: Total manufacturing to account for − Ending work in process inventory = Cost of manufactured $1,425,000 − Ending work in process inventory = $1,186,000 Ending work in process inventory = $ 239,000 (continued) A2-61 eDirect materials used: