Conrad, Inc. recently lost a portion of its records in an office fire. The follo

Question

Conrad, Inc. recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records. Cost of Goods Sold $65,000 Work-in-Process Inventory, Beginning 10,500 Work-in-Process Inventory, Ending 9,000 Selling and Administrative Expense 15,000 Finished Goods Inventory, Ending 15,000 Finished Goods Inventory, Beginning ? Direct Materials Used ? Factory Overhead Applied 12,000 Operating Income 14,000 Direct Materials Inventory, Beginning 11,000 Direct Materials Inventory, Ending 6,000 Cost of Goods Manufactured 60,000 Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The CFO of Fisher, Inc. has asked you to recalculate the following accounts and to report to him by the end of the day. What is the amount of net sales? $68,500. $94,000. $72,500. $75,000.

Explanation / Answer

Operating Income = $14,000
Selling and Administrative Expense = $15,000
Cost of Goods Sold = $65,000

Operating Income = Gross Profit - Selling and Administrative Expense
$14,000 = Gross Profit - $15,000
Gross Profit = $29,000

Gross Profit = Net Sales - Cost of Goods Sold
$29,000 = Net Sales - $65,000
Net Sales = $94,000

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