Smartbells Inc. manufactures intelligent, Wi-Fi enabled dumbbells, allowing users to record workout data onto the cloud. Smartbell's CEO, Arnold, is trying to strengthen his analytical skills by better understanding the relationships between accounts and working backwards to determine account balances. This year's manufacturing costs are as follows:
From taking an introductory accounting course, in college, Arnold recalls the importance of gross margin and that gross margin percentage is determined by dividing gross margin by sales.
Required:
a. How much direct labor cost was incurred last year?
b. What was the cost of direct materials used?
c. What was the ending balance in WIP Inventory last year?
d. If Finished Goods Inventory had no ending balance and Cost of Goods Sold was $650,000, what was the beginning balance in Finished Goods Inventory last year?
e. Given the company's goal to generate a very high gross margin percentage on these products (70%), how much revenue does the company need to earn on its COGS ($650,000) (round to nearest whole dollar)?

Question

Smartbells Inc. manufactures intelligent, Wi-Fi enabled dumbbells, allowing users to record workout data onto the cloud. Smartbell's CEO, Arnold, is trying to strengthen his analytical skills by better understanding the relationships between accounts and working backwards to determine account balances. This year's manufacturing costs are as follows:
  From taking an introductory accounting course, in college, Arnold recalls the importance of gross margin and that gross margin percentage is determined by dividing gross margin by sales.
Required:
a. How much direct labor cost was incurred last year?
b. What was the cost of direct materials used?
c. What was the ending balance in WIP Inventory last year?
d. If Finished Goods Inventory had no ending balance and Cost of Goods Sold was $650,000, what was the beginning balance in Finished Goods Inventory last year?
e. Given the company's goal to generate a very high gross margin percentage on these products (70%), how much revenue does the company need to earn on its COGS ($650,000) (round to nearest whole dollar)?

Quizplus · Accepted Answer

The Answer of Smartbells Inc. manufactures intelligent, Wi-Fi enabled dumbbells, allowing users to record workout data onto the cloud. Smartbell's CEO, Arnold, is trying to strengthen his analytical skills by better understanding the relationships between accounts and working backwards to determine account balances. This year's manufacturing costs are as follows:
  From taking an introductory accounting course, in college, Arnold recalls the importance of gross margin and that gross margin percentage is determined by dividing gross margin by sales.
Required:
a. How much direct labor cost was incurred last year?
b. What was the cost of direct materials used?
c. What was the ending balance in WIP Inventory last year?
d. If Finished Goods Inventory had no ending balance and Cost of Goods Sold was $650,000, what was the beginning balance in Finished Goods Inventory last year?
e. Given the company's goal to generate a very high gross margin percentage on these products (70%), how much revenue does the company need to earn on its COGS ($650,000) (round to nearest whole dollar)?