The following information has been taken from the perpetual inventory system of Elite Manufacturing Company for the month ended August 31: Purchases of direct materials $ 60,000Direct materials used $ 50,000Direct labor costs assigned to production $ 25,000Manufacturing overhead costs incurred (and applied) $ 35,000 Balances in inventory August 31 August 1Materials $ ? $ 25,000Work in Process $ 65,000 $ 47,000Finished Goods $ 60,000 $ 43,000 The total amount of inventory to be included in Elite's August 31st balance sheet amounts to:Multiple Choice$135,000.$210,000.$160,000.Some other amount.
Question
The following information has been taken from the perpetual inventory system of Elite Manufacturing Company for the month ended August 31: Purchases of direct materials 50,000Direct labor costs assigned to production 35,000 Balances in inventory August 31 August 1Materials 25,000Work in Process 47,000Finished Goods 43,000 The total amount of inventory to be included in Elite's August 31st balance sheet amounts to:Multiple Choice210,000.$160,000.Some other amount.
Solution
The total amount of inventory to be included in Elite's August 31st balance sheet can be calculated by adding the balances of materials, work in process, and finished goods.
To find the balance of materials on August 31, we need to subtract the direct materials used during the month from the purchases of direct materials. In this case, the direct materials used is 60,000. Therefore, the balance of materials on August 31 is 50,000 = $10,000.
The balance of work in process on August 31 is given as $65,000.
The balance of finished goods on August 31 is given as $60,000.
Now, we can calculate the total amount of inventory by adding the balances of materials, work in process, and finished goods.
65,000 (work in process) + 135,000.
Therefore, the total amount of inventory to be included in Elite's August 31st balance sheet is $135,000.
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