Tweety Ltd has budgeted to produce the following units during the third quarter of 2023:
July 3 680
August 4 450
September 4 170
Two litres of direct material at N$ 6.25 per litre are required for each unit of finished product. Ending direct material inventory is expected to be 70% of the following month’s production requirements. Material required during any month will be purchased during the previous month.
The cost of direct material to be purchased in July amounts to:
At 31 December 2019 Mohling Company’s inventory records indicated a balance of N$ 632 000. Upon further investigation it was determined that this amount included the following:
· N$ 112 000 in inventory purchases made by Mohling shipped from the seller 27/12/2019 terms FOB destination, but not due to be received until 2 January,
· N$ 74 000 in goods sold by Mohling with terms FOB destination on 27 December. The goods are not expected to reach their destination until 6 January
· N$ 6 000 of goods received on consignment from Dollywood Company
What is Mohling’s correct ending inventory balance at 31 December 2019?