Question:
On 30 June 2009, a flash flood damaged the warehouse and factory of ABC corporation, completely destroying the work-in-progress inventory. There was no damage to either the raw materials or finished goods inventories. A physical verification taken after the flood revealed the following valuations:
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|
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Raw materials
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1,24,000
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Work-in-progress
|
?
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|
Finished goods
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2,38,000
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The inventory on 1 January 2009 consisted of the following:
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Raw materials
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60,000
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Work-in-progress
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2,00,000
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Finished goods
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2,80,000
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5,40,000
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A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales. The sales for the first six months were Rs. 6,80,000. Raw material purchases were Rs. 2,30,000. Direct labour costs for this period were Rs. 1,60,000 and manufacturing overhead has historically been 50% of direct labour.
Compute the cost of work-in-progress inventory lost on 30 June 2009 by preparing a statement of cost and profit.