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Cost of Batteries

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Product Cost Flows; Product versus Period Costs [LO2, LO3] The Devon Motor Company produces motorcycles. During April, the company purchased 8,000 batteries at a cost of $10 per battery. Devon withdrew 7,600 batteries from the storeroom during the month. Of these, 100 were used to replace batteries in motorcycles used by the company's traveling sales staff. The remaining 7,500 batteries withdrawn from the storeroom were placed in motorcycles being produced by the company. Of the motorcycles in production during April, 90% were completed and transferred from work in process to finished goods. Of the motorcycles completed during the month, 30% were unsold at April 30.

Required:

Determine the cost of batteries that would appear in each of the following accounts at April 30:
Raw Materials.
Work in Process.
Finished Goods.
Cost of Goods Sold.
Selling Expense.
Specify whether each of the above accounts would appear on the balance sheet or on the income statement at April 30.
1. a. Batteries purchased 8,000
Batteries drawn from inventory ____________

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Batteries remaining in inventory ____________
Cost per battery x $ ____________

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Cost in Raw Materials Inventory at April 30 $ ____________

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b. Batteries used in production ____________

Motorcycles completed and transferred to Finished Goods ____________

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Motorcycles still in Work in Process at April 30 ____________
Cost per battery x $ ____________

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Cost in Work in Process Inventory at April 30 $ ____________

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c. Motorcycles completed and transferred to Finished Goods (above) ____________
Motorcycles sold during the month ____________

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Motorcycles still in Finished Goods at April 30 ____________
Cost per battery x $ ____________

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Cost in Finished Goods Inventory at April 30 $ ____________

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d. Motorcycles sold during the month (above) ____________
Cost per battery x $ ____________

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Cost in Cost of Goods Sold at April 30 $ ____________

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e. Batteries used in salespersons' motorcycles ____________
Cost per battery x $ ____________

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Cost in Selling Expense at April 30 $ ____________

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2. Raw Materials Inventory __________
Work in Process Inventory __________
Finished Goods Inventory __________
Cost of Goods Sold __________
Selling Expense __________

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Solution Summary

The solution explains the cost of batteries that would appear in various inventory accounts and income statement accounts.

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