Problem 2-47 Inventory Estimates; Partial Data (LO 2-5, 2-6)

On May 10, after the close of business, Fresno Furniture Company had a devastating fire that destroyed the companys work-in-process and finished-goods inventories. Fortunately, all raw materials escaped damage because materials owned by the firm were stored in another warehouse. The following information is available:

Sales revenue through May 10		$	330,000
Income before taxes through May 10			68,000
Direct labor through May 10			120,000
Cost of goods available for sale, May 10			275,000
Work-in-process inventory, January 1			21,000
Finished-goods inventory, January 1			35,000

Fresno Furniture Companys accountants determined that the cost of direct materials used normally averages 25 percent of prime costs (i.e., direct material + direct labor). In addition, manufacturing overhead is 50 percent of the firms total production costs. The gross margin is 30 percent of sales.

Required:

The company is in the process of negotiating a settlement with its insurance company.

1.	Calculate the cost of finished-goods inventory that was destroyed by the fire.

2.	Calculate the cost of work-in-process inventory that was destroyed by the fire.