Problem 4 - Inventory

Fill up the missing figures

Co. Alpha
Sales 3,000
Cost of goods sold
Beginning Inventory 300

Plus: Purchases 975

Less Ending Inventory 225
Cost of goods sold 1,050
Gross Margin 1,950
Period Expenses 300
Net Income/(loss) 1,650

Problem 5 - Inventory

Spencer Manufacturing Company has the following balances

A. Materials Inventory 150,000

B Work in process 400,000
C Finished goods 80,000

During the period the following occurred:

1 Purchased for cash worth of raw materials 870,000

Delivery charges for these materials were 23,000
2 Worth of direct labor used in the production pro 570,000
3 Worth of materials used in the production proce 850,000
4 The following costs were incurred:
Indirect labor 30,000
Factory supplies used 40,000
Property taxes and insurance 10,000
Depreciation factory 60,000
Factory utilities 150,000
Depreciation - manufacturing 40,000
Selling and Administrative 20,000
5 Worth of work in process inventory transferred t 2,000,000
6 Sales were 3,000,000
7 The ending balance in Finished goods inventory 90,000

Calculate the Ending Materials and Work in Process Inventory balances.

Materials Inventory WIP

Beg Balance 150,000 400,000
1. Purchase 870,000
Delviery charge 23,000
2. Direct Labor 570,000
3. Materials transfer -850,000 850,000
4. Indirect labor 30,000
Factory supplies 40,000
Depreciation-factory 60,000
Factory utilities 150,000
Depreciation – Mfg 40,000
Property taxes 10,000
5. Finished goods-transfers -2,000,000
Cost of goods sold 193,000 150,000

Ending balance 193,000 150,000

A B
What was Marks Manufacturing’s gross margin during the period?

Sales 3,000,000
Cost of Goods sold 1,990,000
Gross Margin 1,010,000
 Problem 4
1
Co. Bravo Co. Charlie Co. Delta 2
300 1,500 2,000 3
4
225 650 300 Problem 5

975 850 1,200 5

300 300 250 6
900 1,200 1,250 7
- 600 300 750 8
400 150 800
- 1,000 150 -50

FG
 80,000

2,000,000
2,080,000
1,990,000
90,000
 Questions Answers
Problem 3: How much is the Net Income/loss of Co. Alpha? 1,650
Problem 3: How much is the Net Income/loss of Co. Bravo? -1,000
Problem 3: How much is the Cost of Goods sold of Company Charlie? 1,200
Problem 3: How much is the Ending inventory of Co. Delta? 250

Problem 4: How much is the ending materials inventory balance of Spencer Company? 193,000
Problem 4: How much is the WIP ending balance of Spencer Company? 150,000
Problem 4: How much is the Cost of Goods sold of Spencer Company? 1,990,000
Problem 4: How much is the Gross margin of Spencer Company? 1,010,000
 1,650
-1,000
1,200
250

193,000
150,000
1,990,000
1,010,000