Question

As at the 1/1/2004 stock of finished goods at market value GHS 4200 (in units 300
transferred at cost plus 20%) during the year unit started were 4000 but completed
units were 3800 and were transferred to warehouse at cost plus 20%. Total direct
cost and total indirect cost on all the 4000 units at production centers were GHS85,
000 and GHS45,000 respectively. Opening stock of work-in-progress was 400
units valued at the factory cost of GHS6, 000, and the value of the work-in-progress
at the close of the year was GHS2000.unit sold during the year was 3300
respectively. You are required to determine the following:
a. Total factory cost for the period
b. Net factory cost of the period
c. The factory cost of
i. Opening stock of finished goods
ii. Sales of finished goods
iii. Closing stock of finished goods
d. Market value of
i. Opening stock of finished goods
ii. Sales of finished goods
iii. Closing stock of finished goods Manufacturing profit
i. Total Manufacturing profit realized during the period
ii. Total Manufacturing profit created during the period
iii. Total Manufacturing profit created during the period and realized
f. Closing stock of finished goods to be reported in the balance sheet
g. Provision for unrealized profit
i. On opening stock of finished goods
ii. On closing stock of finished goods
iii. The net provision for unrealized profit

Answer 1

Work in Progess Inventory
Beg. bal.	6,000	Cost of goods manufactured	134,000
Direct cost	85,000
Indirect cost	45,000
	136,000
End. bal.	2,000

a. Total factory cost for the period = GH $ 136,000

b. Net factory cost for the period = GH $ 136,000 - GH $ 2,000 = GH $ 134,000.

c. Factory cost of:

i. Opening stock of finished goods = GH $ 4,200 / 120 % = GH $ 3,500

ii. Sale of finished goods ( weighted av. cost method) = [$ ( 3,500 + 134,000 ) / ( 300 + 3,800 ) units] + 3,300 units = $ 110,670.73

iii. Closing stock of finished goods = [ $ ( 3,500 + 134,000 ) / ( 300 + 3,800 ) ] * 800 units = $ 26,829.27

d. Market value of :

i. Opening stock of finished goods = $ 4,200

ii. Sale of finished goods = $ 110,670.73 x 1.20 = $ 132,804.88

iii. Closing stock of finished goods = $ 26,829.27 x 1.20 = $ 32,195.12