Question

The following events took place at a manufacturing company for the current year:(1) Purchased $95,000 in direct materials.(2) Incurred labor costs as follows: (a) direct, $56,000 and (b) indirect, $13,600.(3) Other manufacturing overhead was $107,000, excluding indirect labor.(4) Transferred 80% of the materials to the manufacturing assembly line.(5) Completed 65% of the Work-in-Process during the year.(6) Sold 85% of the completed goods.(7) There were no beginning inventories.What is the value of the ending Work-in-Process Inventory?a. $95,060.50.b. $13,261.50.c. $14,259.00.d. $88,410.00.

Answer 1

Answer:

the value of the ending Work-in-Process Inventory is d. $88,410.00.

Explanation:

Materials utilized in Production Process

Materials Cost=$95,000×80%

                       = $76,000

Cost of Goods Manufactured Schedule

Direct Materials                             $76,000

Direct Labor                                   $56,000

Indirect Labor                                 $13,600

Other manufacturing overhead   $107,000

Total Manufacturing Costs          $252,600

Completed = 65%

Incomplete = 35%

Opening Work In Process Inventory = Nill

Therefore, ending Work-in-Process Inventory = $252,600 × 35%

                                                                            = $88,410

Answer 2

Answer:

D $88410

Explanation:

Work in progress includes all the raw materials, direct labour and conversion costs incurred so far excluding cost of goods sold .

WIP= Intial WIP +Manufacturing costs incurred- Cost of goods sold.

The WIP inventory at the begining of the period is given as nil.

WIP during the period = (95000*80%)+56000+13600+107000

=252600(but it was given that 65% of the Process was completedi.e., finished goodswhich are not the part of the WIP inventory ; hence the remaining 35% is the Work in process inventory)

=$ 88410.

Further the remaining raw material 20% = 95000*20% shall not comprise a part of the WIP as it has not been brought into process itself , it shall lie in raw materials inventory itself.It shall be counted into the WIP once it is brought into the manufacturing assembly line.