Tierney company begins operations on april 1. information from job cost sheets shows the following.

Tierney Company begins operations on Apr1. Information from job cost sheets shows the following Manufacturing Costs Assigned Job Number Month Completed April $7,100 $4,900 May June 10 May 5,100 $2,200 June April 5,700 June 4,300 2,200 12 13 6,600 6,200 4,700 Not complete Job 12 was completed in April. Job 10 was completed in May. Jobs 11 and 13 were completed in June. Each job was sold for 25% above its cost in the month following completion. ▼ (a) Your answer is correct. What is the balance in Work in Process Inventory at the end of each month? Work in Process Inventory April 30 11400 May 31 22200 June 30 10900 Click if you would like to Show Work for this question: Open Show Work SHOW SOLUTION SHOW ANSWER Attempts: 1 of 1 used ▼ (b) 「 Your answer is correct. What is the balance in Finished Goods Inventory at the end of each month? Finished Goods Inventory April 30 2200 May 31 12000 June 30 23900 Click if you would like to Show Work for this question: Open Show Work

General guidance

Concepts and reason
Inventory: Manufacturing or a trading business involves selling of goods. Goods that are sold in the ordinary course of business are called as inventory. Inventory includes raw materials, work in process, and finished goods. Raw materials are used to produce finished goods. Work in process is unfinished inventory that requires some work to complete it to saleable condition. Finished goods are inventory that are ready to be sold.

Fundamentals

Cost of goods manufactured: cost of goods manufactured provides for the total cost of finished goods manufactured and unsold at the end of the period. It is calculated using the below formula:

Cost of goods sold: Cost of goods sold provides for the cost of goods actually sold during the period. It is calculated using the below formula:

Step-by-step

Step 1 of 3

(a)
Balance in work in process at the end of each month is:

Part a
Balance in work in process at the end of each month is:

Job 10 and 11 are started in April and not completed in April. Their costs consists of work in process inventory at the end of April and it is $11,400. Similarly in May Job 11, 13, and 14 are unfinished and costs incurred in them till May 31 are $22,200. At the end of June only job 14 is pending and $10,900 incurred in it.

While calculating May ending work in process inventory balance for Job 11 it is essential to add costs incurred in April for Job 11. Ignoring earlier month’s costs in work in process balance will be incorrect.

Balance in finished goods inventory at the end of each month is determined using the given information.

Step 2 of 3

(b)
Balance in finished goods inventory at the end of each month is:

Part b
Balance in finished goods inventory at the end of each month is:

Jobs finished in the month are sold in the following month. That means jobs finished in the month only are the part of ending finished goods for that month. Finished jobs of previous months are sold and not part of current month finished goods inventory. As calculated in Step (2) finished goods inventory at each month end is $2,200, $12,000, and $23,900 respectively for April, May, and June.

Jobs finished in earlier months should not be considered in the finished goods balance of the current month because they are already sold. Considering earlier months finished goods in the current month finished goods inventory will be incorrect.

Amount of gross profit for each month is determined using the given information.

Step 3 of 3

(c)
Gross profit for each month is:

Gross profit for each month is shown in the above table.

Part c
Gross profit for each months is:

Gross profit is the product of cost of goods sold and the mark-up percent on it. Markup percent given is 25%. Cost of goods sold is nothing but finished goods inventory of the previous month as calculated in Step (2). Then gross profit for each month is $550, $3,000, and $5,975 respectively for May, June, and July.

Ending inventory for the month should not be taken in calculation of gross profit. Ending inventory of previous month should be considered. Considering current month ending inventory in its gross profit calculation will be incorrect.

Answer

Part a
Balance in work in process at the end of each month is:

Part b
Balance in finished goods inventory at the end of each month is:

Part c
Gross profit for each months is:

Answer only
Part a
Balance in work in process at the end of each month is:

Part b
Balance in finished goods inventory at the end of each month is:

Part c
Gross profit for each months is:

Particulars Beginning work in process Add: Direct materials Direct labor Amount (S) XXX XXX XXX Factory overhead Less: Closing work in process Cost of goods manufactured XXX (XXX) XXX
[Cost of goods manufactured + Opening finished goods (-Ending finished goods balance Cost of goods sold
Accumulated costs Мay April S June Job 10 7,100 4,300 S S 11 9,400 $4,300+$5,100] 12 $ 13 6,600 14 $ $ S 6,200 10,900 [$6,200+S4,700] S 11,400S Total 22,200 S 10,900
Accumulated costs April |Мay June Job S 12,000 10 [$7,100 $4,900] 11 11,600 [$4,300 $5,100 $2,200] 12 2,200 $ 13 12,300 [$6,600 $5,700] 14 $ $ 2,200S 12,000 S Total S 23,900 EA
Gross profit calculation |Мay July |June Particulars Finished goods balance of previous month [From Step (2)] Xmark up perenet| Gross profit 2,200 S 25% 12,000 S S 23,900 25% 25% 550 S 3,000 S 5,975 S
Work in process inventory April 30 May 31 June 30. $ 11,400 22,200 $ 10,900
Work in process inventory April 30 May 31 June 30. $ 11,400 22,200 $ 10,900
Work in process inventory April 30 May 31 June 30 $ 11,400 17,100 4,700
Work in process inventory April 30 May 31 June 30 $ 11,400 17,100 $ 10,900 EA
Work in process inventory April 30 May 31 June 30 $ 13,600 17,100 $ 10,900
Finished goods inventory April 30 May 31 June 30 $ 2,200 S 12,000 23,900