Question

Espresso, Co. produces custom windows to specifications provided by architects. At the end of its accounting period, its account balances indicated the following:

Raw Materials Inventory $62,000

Work in Process Inventory 126,000

Finished Goods Inventory 56,000

Cost of Goods Sold 518,000

Manufacturing Overhead (credit balance) 42,000

A) Determine the adjusted balances of the accounts if the balance in Manufacturing Overhead is considered immaterial in amount and assigned to Cost of Goods Sold.

Raw Material Inventory $

Work in Process Inventor $

Finished Goods Inventory $

Cost of Goods Sold $

B) Determine the adjusted balances of the accounts if the balance in Manufacturing Overhead is considered material in amount.

Raw Material Inventory $

Work in Process Inventory $

Finished Goods Inventory $

Cost of Goods Sold $

Answer 1

A) Determine the adjusted balances of the accounts if the balance in Manufacturing Overhead is considered immaterial in amount and assigned to Cost of Goods Sold.

Raw Material Inventory $62000

Work in Process Inventor $126000

Finished Goods Inventory $56000

Cost of Goods Sold (518000-42000) = $476000

B) Determine the adjusted balances of the accounts if the balance in Manufacturing Overhead is considered material in amount.

Raw material inventory = $62000

Work in process inventory = 126000-(42000/700000*126000) = $118440

Finished goods inventory = 56000-(42000/700000*56000) = $52640

Cost of goods sold = 518000-(42000/700000*518000) = $486920