Estimation of Loss On February 17, 2007 a flood destroyed the work in process inventory and half the raw materials inventory of the LRT Company. There was no damage to the finished goods inventory. A physical inventory taken after the flood indicated the following values:
|
Raw materials |
$35,000 |
Finished goods |
$79,000 |
|
Inventories, December 31, 2006 |
|||
|
Raw materials |
$70,000 |
Raw materials purchases |
$20,000 |
|
Work in process |
80,000 |
Direct labor cost |
30,000 |
|
Finished goods |
72,000 |
Manufacturing overhead cost |
15,000 |
|
Sales (to February 17) |
50,000 |
Gross profit rate (on sales) |
40% |
Required
Compute the value of the inventory destroyed by the flood.