On June 30, 2008, a flash flood damaged the warehouse and factory of Drybed Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations:
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . $105,000
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,500
The inventory on January 1, 2008, consisted of the following:
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $118,000
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,000
Raw materials . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 54,000
$ 283,000
A review of the books and records disclosed that the gross profit margin historically approximated 36% of sales. The sales for the first six months of 2008 were $496,000. Raw materials purchases were $87,000. Direct labor costs for this period were $120,000, and manufacturing overhead has historically been applied at 60% of direct labor.
Compute the value of the work-in-process inventory lost on June 30, 2008.