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9 November, 19:58

River Falls Manufacturing uses a normal cost system and had the following data available for 2018: Direct materials purchased on account $148,000 Direct materials requisitioned 88,000 Direct labor cost incurred 127,000 Factory overhead incurred 148,000 Cost of goods completed 299,000 Cost of goods sold 250,000 Beginning direct materials inventory 34,000 Beginning WIP inventory 70,000 Beginning finished goods inventory 55,000 Overhead application rate, as a percent of direct-labor costs 105 percent The ending balance of work-in-process inventory is

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  1. 9 November, 20:39
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    The ending balance of work-in-process inventory is $64,000

    Explanation:

    Opening Raw Material = $34,000

    Opening WIP Inventory = $70,000

    Opening Finished Goods Inventory = $55,000

    Raw material purchased = $148,000

    Raw materials requisitioned = $88,000

    Closing Raw Material = Opening + Purchase - Requisitioned

    = $34,000 + $148,000 - $88,000 = $94,000

    Closing Finished Goods Inventory = Opening + Cost of goods produced - Cost of goods sold

    = $55,000 + $299,000 - $250,000 = $104,000

    Expense total incurred on goods entered for production = Material requisitioned + Labor cost incurred + Factory overhead

    = $88,000 + $127,000 + $148,000 = $363,000

    Out of which cost of completed goods = $299,000

    Thus remaining is work in process = $363,000 - $299,000 = $64,000

    That is Closing WIP Inventory = $64,000

    Note: It is obvious that the expense of labor and overheads incurred in this period includes expense incurred to convert opening WIP in to finished goods and the balance is closing WIP.

    The ending balance of work-in-process inventory is $64,000
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