Reference no: EM132985132

A tornado touched down and destroyed most of a company's facilities. However, the controller and the cost accountant were able to recover a small part of manufacturing cost data for the current and prior month. They need records in order to file an insurance claim.

This is the data they were able to recover:

Direct Labor Cost $250,000
Purchase of Raw Materials $365,000
Raw Materials used for the month $350,000
Sales for the month $1,240,000
Gross Profit Ratio 40% of sales (Gross Profit was discussed in chapter 5 of the ACC 2111 textbook)
Cost of goods available for sale $770,000
Manufacturing overhead was 60% of direct labor
Inventories at the end of the prior month: Finished Goods $38,000; Work in Process $25,000; and Raw Materials $19,000.

Instructions:

Problem 1: Calculate the amount of cost in the Raw Materials, Work in Process, and Finished Goods Inventory accounts for the current month (when the tornado took place) using the information above.

Problem 2: Using the knowledge acquired in the prior chapter and the ACG 2021 course (financial accounting), what analysis or conclusions can you make from the data? Can the data be used to prepare financial statements? Which Financial Statement could be prepared (check items included in each financial statement)?. Will this be helpful for the insurance company to process a claim?