1 April 12, after the close of business, Singh & Sons had a devastating fir stroyed the company's work-in-process and finished-goods inventories. raw materials escaped damage because materials owned by the firm w other warehouse. The following information is available: Sales revenue through April 12 Income before taxes through April 12 $330,000 68,000
1 April 12, after the close of business, Singh & Sons had a devastating fir stroyed the company's work-in-process and finished-goods inventories. raw materials escaped damage because materials owned by the firm w other warehouse. The following information is available: Sales revenue through April 12 Income before taxes through April 12 $330,000 68,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:On April 12, after the close of business, Singh & Sons had a devastating fire that
destroyed the company's work-in-process and finished-goods inventories. Fortunately,
all raw materials escaped damage because materials owned by the firm were stored in
another warehouse. The following information is available:
Sales revenue through April 12
Income before taxes through April 12
Direct labor through April 12
Cost of goods available for sale, April 12
Work-in-process inventory, January 1
Finished-goods inventory, January 1
Gross margin
$330,000
68,000
120,000
275,000
21,000
37,000
30% of sales
The firm's accountants determined that the cost of direct materials used normally
averages 25 percent of prime costs (i.e., direct material + direct labor). In addition,
manufacturing overhead is 50 percent of the firm's total production costs.
Required:
Singh & Sons is in the process of negotiating a settlement with its insurance company.
Prepare an estimate of the cost of work-in-process and finished-goods inventories that
were destroyed by the fire.
Cost of finished-goods inventory
Cost of work-in-process inventory
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