Question

Luke’s Lubricants starts business on January 1. The following operations data are available for January for the one lubricant it produces. Beginning inventory : 0 Gallons Started in January 165,000 Gallons Ending work-in-process inventory (80% complete) 17,000 Gallons Costs incurred in January follow : Materials $ 221,200 Labor 22,000 Manufacturing overhead 80,000 All production at Luke’s is sold as it is produced (there are no finished goods inventories). Required: a. Compute cost of goods sold for January. (Do not round intermediate calculations.) b. What is the value of work-in-process inventory on January 31? (Do not round intermediate calculations.)

Answer 1

a. Compute cost of goods sold for January

$296,000

b. What is the value of work-in-process inventory on January 31?

$ 27,200

Step-by-step explanation:

Total Cost Unit Sold

$221,200 $165,000 Materials

$22,000 -$17,000 Labor

$80,000 - Manufacturing overhead

$323,200 $148,000

• a. Compute cost of goods sold for January

Equivalent completed units in ending work-in-process inventory 17.000 x 80% = $13,600

Equivalent units produced 148.000 + 13.600 = 161.600 Units

Per equivalent unit $323,200 / 161.600 = $2,00

Cost of Goods Sold 148.000 / 2,00 = $296,000

• b. What is the value of work-in-process inventory on January 31?

Equivalent completed units in ending work-in-process inventory

13.600 x $2,00 = $27,200

Or it's possible to do it

$323,200 - $296,000 = $ 27.200