Conrad, Inc Direct Labor Cost Incurred During the Period Amounted to 1

question 29

Multiple Choice

Conrad, Inc. recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records. $\begin{array}{lr}\text { Cost of Goods Sold } & \$ 65,000 \\\text { Work-in-Process Inventory, Beginning } & 10,500 \\\text { Work-in-Process Inventory, Ending } & 9,000 \\\text { Selling and Administrative Expense } & 15,000 \\\text { Finished Goods Inventory, Ending } & 15,000 \\\text { Finished Goods Inventory, Beginning } & ?\\\text { Direct Materials Used } & ? \\\text { Factory Overhead Applied } & 12,000 \\\text { Operating Income } & 14,000 \\\text { Direct Materials Inventory, Beginning } & 11,000 \\\text { Direct Materials Inventory, Ending } & 6,000 \\\text { Cost of Goods Manufactured } & 60,000\end{array}$ Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The CFO of Conrad, 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 the beginning of the year?

• A)$10,500.
• B)$15,000.
• C)$20,000.
• D)$25,000.

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Definitions:

Acquisition Differential Amortization

The process of systematically reducing the value of the excess amount paid over the fair value of net assets acquired in a business combination.

Equity Method

An accounting technique used to record investments in which the investor has significant influence but not control over the investee.

Voting Shares

Shares of a corporation’s stock that give the shareholder the right to vote on matters of corporate policy and the election of the board of directors.

Patents

Legal protections granted to inventors, giving them exclusive rights to use, sell, and manufacture their invention for a certain period.