Callaway Case Study for Accounting Case Studies Book

a. In raw materials are cost of materials such as wood, iron, plastic, optic fiber that are haven’t been placed in production.in the work in progress inventory costs expected are the cost of materials placed in production, the labor, and allocated overhead used so far. The cost of finished goods inventory expected are the materials, labor, and allocated overhead incurred to make the finished products on hand.

b. Inventories are net of an estimated allowance for obsolete or unmarketable inventory.

c. I.the “reserve for obsolete inventory” account doesn’t appear on callaway’s financial statements because it has already been subtracted from the inventory account. Ii. The gross amount of inventory at the end of 2006 is $247,795 and $232,872 at the end of 2007 iii. $6,537 of the $20,129 reserve for obsolete inventory is attributable to raw materials inventory, $154.99 is attributable to work in progress inventory and $13,436.11 is attributable to finished goods inventory.

d. Cost of sales $12,182

Provision for obsolete inventory $12,182

Provision for obsolete inventory $9,368

​Inventory​​​$9,368

e. i. the cost of finished goods sold in 2007 was $619,186. Ii. The cost of finished goods transferred from work in progress in 2007 was $247,109. Iii. The cost of raw materials transferred to work in progress in 2007 was $90,982. Iv. The cost of raw materials purchased during 2007 was $87,369. V. the amount of cash disbursed for raw materials purchased during 2007 was $54,350.

f. Cost of sales: 2007= 631368/253001= 2.49 2006= 619832/265110= 2.34

g. 2007= 365/2.49= 146.59 2006= 365/2.34= 155.98 it took 9 more days in 2006 to sell inventory.

h. 2007 82185+168884= 251069 2006 85798+175117= 260915