Question

The following information was taken from the accounting records of Tech Inc. for the financial year 2019. The number of units of widgets produced is 2000. R&D, marketing and customer service expenses Ending work-in-process inventory Indirect manufacturing labour Beginning finished goods inventory Machinery leasing cost Beginning direct material inventory Ending finished goods inventory Ending direct material inventory Beginning work-in-process inventory Purchase of direct material I Miscellaneous production overheads Depreciation on production plant Direct manufacturing labour Factory supplies used Factory utilities Sales revenue $70,000 $7,000 $7,000 $22,000 $3,000 $11,000 $18,000 $8,000 $6,000 $73,000 $1,000 $2,000 $9,000 $2,000 $5,000 $210,000 Required: 1. Using the above information, prepare a Statement of Cost of Goods Manufactured in proper form. What is the unit cost for valuing inventory for external reporting? 2. Prepare an income statement to determine the operating income 3. Most of the company's accounting records were destroyed in a warehouse fire on December 31st, 2019. Mr. Smart, the CEO Tech Ine, did not want to give up on the business. "We need to fill out the insurance forms as soon as possible to get back all our lost inventories". Assume you are the accountant at Tech Ine. Estimate the amount recoverable in insurance proceeds st

Answer 1

Statement of Cost of Goods Manufactured Income Statement 11,000 Sales Revenue 2,10,000 73,000 84,000 Beginning Direct Material Inventory Add: Purchase of direct material Materials available Less: Ending Direct Material Inventory Direct materials used. Add: Direct Manufacturing Labour Cost of goods Sold: Cost of goods manufactured Add: Beginning finished goods inventory Cost of goods available for sale Less: Ending finished goods inventory 1,04,000 22,000 1,26,000 18,000 8,000 76,000 9,000 Cost of goods sold 1,08,000 Gross margin 1,02,000 7,000 1,000 3,000 R&D marketing and Customer Service Expense Manufacturing overhead Indirect manufacturing Labour Miscellaneous Production Overheads Machinary Leasing Cost Depreciation on production plant Factory Supples used Factory Utilities 70,000 2,000 Net Income 32,000 2,000 5,000 20,000 Amount Revoverable in Insurance Proceeds

Total manufacturing costs added 1,05,000 11,000 6,000 22,000 6,000 Stock at the Beginning of the year: Material Work in Process Finished Goods Add: Cost of Goods Manufactured During the Year Add: Beginning Work in Process Inventory Less: Ending Work in Process Inventory 39,000 7,000 1,04,000 Cost of goods manufactured 1,04,000 Less: Cost of Goods Sold During the Year 1,08,000 Unit Cost for Valuing the Inventory Value as on the date of fire 35,000 Cost of goods manufactured 1,04,000 Less: Salvaged Stock (Assumed to be zero) No. of Units Produced 2,000 The value of stock lost on fire 35,000 Unit Cost for Valuing the Inventory 52