Reference no: EM13930047

The question requires you to do some deep thinking and 'connect' different pieces of information to work out the requirements.

For 'a' we first need to work out 'cost of goods manufactured' using the info in point 8. If you carefully observe, there is a relationship percentage given. Once you have worked this out, you need to work the required figure out by applying the formulae 'WIP beginning Inventory + Total manufacturing cost - WIP ending Inventory = Cost of goods manufactured. All other figures given or can be worked out, except the one we want to find out. Thus, using maths equation rules we can work the missing figure out. The sketch on page 43 gives all relationships among all variables, and it does help in working out the requirements here. 'Cost of goods sold' figure needed here can be worked out from point 8; this figure you need to work out req. 'a'. From point 8, you can also work out 'cost of goods manufactured' figure, which you need in working out req. 'b'.

For working out requirement 'e' (DM used), I give the following hint to facilitate your workings a bit for requirement 'f' (note, for 'e', you need to first solve 'f'): For this requirement you will need to take into account the pieces of information in points 1 and 2: As per point number 1, 'Materials closing inventory' is $4000 less than the 'Materials opening Inventory'. This means the difference between materials beginning and closing inventories is $4000 i.e. materials closing inventory is $4000 less than materials beginning inventory. As per point 2, 'DM closing Inventory' is half of the 'DM opening Inventory'. Thus, denoting 'DM opening Inventory' to be 'X', students need to solve the following equation to work out 'DM closing Inventory':

The decreased in DM inventory (as explained above) = 0.5 of 'X'

You solve this equation for 'X', this will give you 'DM closing Inventory', which will be used in finding 'e', which in turn will feed into finding 'c'. For 'c' you need 'e' and for 'e' you need 'f'. So, if you do 'f' (and 'g'), and then 'e', and then 'c', you should be on right track to complete the rest. The 'key' here is, for each requirement, you need to identity other closely relevant variables in the light of Exhibit 2-9 on page 43 of the text book.