A55 19 W Problem 1

A55 19 W Problem 1 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.) Problem 2 The following income statement for 2015 was prepared by an inexperienced accountant: Sales (net) $675,000 Less: Operating expenses Raw materials purchased $200,000 Direct labour costs $160,000 Advertising expense $ 75,000 Selling and admin salaries $ 70,000 Rent on factory facilities 35 60,000 Depreciation - Sales equipment $ 50,000 Depreciation - Factory equipment $ 35,000 Indirect labour cost $ 20,000 Utilities expense $ 10,000 Insurance expense LiQQQ $5,000 Net loss 5 (10,000) The company president is concerned about the statement's accuracy. Additional information is as follows: Inventory balances Beam ' g of year End of year RM $19,500 $30,000 WIP $25,000 $21,000 FG $40,000 $64,000 Only 60% of the utilities expense and 70% of the insurance expense apply to factory operations, The rest apply to selling and administration operations. Required: Correct the income statement, and prepare a cost of goods manufactured statement for the year. v