Fisher,Inc.recently lost a portion of its records in an office fire.The following information was salvaged from the accounting records.
Direct labor cost incurred during the period amounted to 1.5 times the factory overhead.The CFO of Fisher,Inc.has asked you to recalculate the following accounts and to report to him by the end of the day.
What is the amount in the finished goods inventory at December 31,2010?
A)$10,500.
B)$15,000.
C)$23,000.
D)$25,000. $25,000 = ($58,000 + $17,000)- $50,000 = $25,000

Question

Fisher,Inc.recently lost a portion of its records in an office fire.The following information was salvaged from the accounting records. 
Direct labor cost incurred during the period amounted to 1.5 times the factory overhead.The CFO of Fisher,Inc.has asked you to recalculate the following accounts and to report to him by the end of the day.
What is the amount in the finished goods inventory at December 31,2010?
A)$10,500. 
B)$15,000. 
C)$23,000. 
D)$25,000. $25,000 = ($58,000 + $17,000)- $50,000 = $25,000

Quizplus · Accepted Answer

The calculation for finished goods inventory involves subtracting the cost of goods sold from the cost of goods manufactured, which gives the cost of goods available for sale. Then, the cost of goods available for sale is subtracted from the beginning finished goods inventory to find the ending finished goods inventory. Without additional information, we cannot determine the cost of goods sold for the period, but we do know that the cost of goods manufactured was $58,000 and the beginning finished goods inventory was $17,000. Therefore, the cost of goods available for sale was $75,000 ($58,000 + $17,000) and the ending finished goods inventory was $25,000 ($75,000 - $50,000).