Answer to Question #287693 in Economics for Habtamu Asres

Question

June 30, 2021, a flash flood damaged the warehouse and factory of a particular manufacturing company, completely destroying the work in process inventory. There was no damage to either the direct materials or finished goods inventories. A physical inventory taken after the flood revealed the following costs Direct material $62,000Work in process -0-Finished goods 119,000The inventory on June 1, 2021, consisted of the following Direct material $30,000Work in process 100,000Finished goods 140,000A review of the records disclosed that the gross margin historicallyapproximated 25% of sales. The sales for the first six months of 2021 were $340,000. Direct material purchases were $1150,000. Direct labor costs for this period were $80,000, and manufacturing overhead has historically been 50% of direct labor hour.Required: Compute the cost of work in process destroyed on June 30, 2021

Answer 1

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