Accounting
On December 31, 2012, Acme Company’s facilities were damaged by a fire, destroying the company’s direct material, w.i.p., and f.goods. Information that was ‘salvaged’ revealed the following: 1. Beginning inventory, January 1, 2012: DM, $64,000; WIP, $136,000; FG, $60,000. 2. Key ratios for the year: Gross profit, 20% of sales; Prime costs, 70% of manufacturing costs; Factory overhead, 40% of conversion costs; Ending WIP is always 10% of the – manufacturing costs. 3. All costs are incurred evenly in the manufacturing process. 4. Actual operating data for the year: Sales, $1,800,000; Direct material purchases, $640,000; Direct labour incurred, $720,000
Required: (a) Construct a cost of goods manufactured schedule based on the above information. (b) Calculate the total cost of inventory lost, and identify each category where possible as at December 31, 2012. (i.e. Direct material, WIP, and finished goods inventory.)
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