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"Top Switch Inc. designs and manufactures switches used in telecommunications. Serious flooding throughout the state of Tennessee affected Top...
"Top Switch Inc. designs and manufactures switches used in telecommunications. Serious flooding throughout the state of Tennessee affected Top Switch’s facilities. Inventory was completely ruined, and the company’s computer system, including all accounting records, was destroyed. Before the unfortunate incident, recovery specialists cleaned the buildings. The company controller is very nervous and anxious to recover whatever records he can to support the insurance claim for the destroyed inventory. After consulting with the cost accountant, they decide to retrieve the previous year’s annual report for the beginning inventory numbers. In addition, they also agreed that they need first quarter cost data.The cost accountant was working on the first quarter results before the storm hit, and to his surprise, the report was still in his desk drawer. After reviewing the data , the information shows the following information: Material purchases were $ 325,000; Direct Labor was $ 220,000. Further discussions between the controller and the cost accountant revealed that sales were $ 1,350,000 and the gross margin was 30% of sales. The cost accountant also discovered, while sifting through the information, that cost of goods available for sale was $ 1,020,000 at cost. While assessing the damage, the controller determined that the prime costs were $ 545,000 up to the time of the damage and that manufacturing overhead is 65% of conversion cost. The cost accountant is not sure about all of this, but he decides to see what he can do with the information. The beginning inventory numbers are as follows:Raw Materials, $ 41,000Work in Process, $ 56,000Finished Goods, $ 35,000Required:Determine the amount of cost in the Raw Materials, Work in Process, and Finished Goods Inventory as of the date of the storm. ( Hint: You may wish to reconstruct the various schedules and statements that would have been affected by the company’s accounts during the period.) i believe the answer may be: Facts -R/M Purchases - 325,000DL - 220,000Cost of Goods Sold = 70% of Sales, or 945,000Cost of Goods Available for sale - 1,020,000Prime cost - 545,000 (given) less 220,000 DL means DM was 325,000MOH = 65% of CC, so DL was 35%. DL of 220,000 / .35 = 628,571 CC, and MOH was 408,571Raw Matl - BB 41,000 + 325,000 - 325,000 to WIP = EB 41,000WIP - BB 56,000 + DM 325,000 + DL 220,000 + MOH 408,571= 1,009,571 Cost of Goods MfdFG - BB 35,000 + 985,000 from WIP = 1,020,000 Available for Sale less CGS 945,000 = EB 75,000WIP - Cost of Goods Mfd (above) 1,009,571 less transfers to FG 985,000 = 24,571 EBBUT i need it to be in an excel document, and I dont know how to do that.
