Tierney Construction,Inc.recently lost a portion of its financial records in an office theft.The following accounting information remained in the office files:
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead.The CFO of Tierney Construction,Inc.has asked you to recalculate the following accounts and to report to him by the end of tomorrow.
What should be the amount in the finished goods inventory at December 31,2010?
A)$55,500.
B)$35,000.
C)$43,000.
D)$49,000. $49,000 = $98,000 + $31,000 - $80,000

Question

Tierney Construction,Inc.recently lost a portion of its financial records in an office theft.The following accounting information remained in the office files: 
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead.The CFO of Tierney Construction,Inc.has asked you to recalculate the following accounts and to report to him by the end of tomorrow.
What should be the amount in the finished goods inventory at December 31,2010?
A)$55,500. 
B)$35,000. 
C)$43,000. 
D)$49,000. $49,000 = $98,000 + $31,000 - $80,000

Quizplus · Accepted Answer

The formula to calculate finished goods inventory is Beginning Finished Goods Inventory + Cost of Goods Manufactured - Cost of Goods Sold. Using the information provided, we can calculate this as ($98,000 + $31,000) - $80,000 = $49,000. Therefore, the correct option is D.