Problem - Missing records, computing inventory costs
Rom Williams recently took over as the controller of Johnson Brothers Manufacturing. Last month, the previous controller left the company with little notice and left the accounting records in disarray. Ron needs the ending inventory balances to report first quarter numbers.
For the previous month (March 2011) Ron was able to piece together the following information:
Directed Materials Purchased $ 240,000
Work in process inventory, 3/1/2011 $ 70,000
Direct materials inventory, 3/1/2011 $ 25,000
Finished goods inventory, 3/1/2011 $ 320,000
Conversion Costs $ 660,000
Total manufacturing cost added during the period $ 840,000
Cost of goods manufactured 4 times direct materials used
Gross margin as a percentage of revenues 20%
Revenues $ 1,037,500
Calculate the cost of Work in process inventory, 3/31/11.