Estimate finished goods cost of goods sold , Cost Accounting

ln an attempt to conceal a thefi of funds, Kaito Kid, controller of Shinichi Products, lnc. placed a bomb in the company s record vault. The ensuing explosion left only fragments of the company's factory ledger, as shown below:

Finished Goods Cost of Goods Sold

To bring Mr. Kid to justie, the company must reconstruct its activities for June. You have been assigned to perform the task of reconstruc*ion. After interviewing selected employees and sifting through chaned fragments, you have determined the following additional irrformation:

a. According to the company's treasurer, the accounts payable are for purchases of raw materials only. The company's balance sheet, dated May 31, shows thatAccounts Payable had a P20,000 balance at the beginning of June. The companfs bank has provided
photocopies of all chec*s that cleared the bank during June. These photocopies show that payments to suppliers during June totaled P119,000. (All materials used during the month neredird mderiats.)

b. The production superintendent states that mantrfacturing ovefiead cost is applied to jobs on the basis of direct labor hours. However, he does not rememberthe rate cunently being used by the company.

c. Cost sheets kept in the produc{ion superintendenfs office shonr that only one job was in prrcess on June 30, at the time of the explosion. The job had been charged with P6,600 in materials, and 500 direc't labor hours at PO per hour had been worked on the job.

d. A log is kept in the finished goods warehouse showing all goods transfend in frorn the factory. This log shors that the cost of goods transfened into the finished goods warehouse ftom the fac'tory during June totaled P280,000.

e. The compant's May 31 balance sheet indicates thatthe finished goods inventory totaled P36,000 at the @inning of June.

f. A chaned piece of the payroll ledger, found after sifting through piles of smoking debris, indicates that 11,500 direct labor hours were recorded for June. The company's Personnel Department has verified that as a result of a union contrac't, there are no variations in pay
rates among fac{ory employees.

Posted Date: 4/2/2013 2:45:56 AM | Location : United States







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