DEVRY ACCT 505 Week 1 Case Study

1
DEVRY ACCT 505 Week 1 Case Study

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• Top Switch Inc. designs and manufactures switches
  used in telecommunications. Serious flooding
  throughout the state of Tennessee affected Top
  Switchs facilities. Inventory was completely
  ruined, and the companys computer system,
  including all accounting records, was destroyed.

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• Before the unfortunate incident, recovery
  specialists cleaned the buildings. The company
  controller is very nervous and anxious to recover
  whatever records he can to support the insurance
  claim for the destroyed inventory. After
  consulting with the cost accountant, they decide
  to retrieve the previous years annual report for
  the beginning inventory numbers. In addition,
  they also agreed that they need first quarter
  cost data.
• The cost accountant was working on the first
  quarter results before the storm hit, and to his
  surprise, the report was still in his desk
  drawer. After reviewing the data , the
• information shows the following information
  Material purchases were 325,000 Direct Labor
  was 220,000. Further discussions between the
  controller and the cost accountant revealed that
  sales were 1,350,000 and the gross margin was
  30 of sales. The cost accountant also
  discovered, while sifting through the
  information, that cost of goods available for
  sale was 1,020,000 at cost. While assessing the
  damage, the controller determined that the prime
  costs were 545,000 up to the time of the damage
  and that manufacturing overhead is 65 of
  conversion cost. The cost accountant is not sure
  about all of this, but he decides to see what he
  can do with the information.

3

• The beginning inventory numbers are as
  followsRaw Materials, 41,000Work in Process,
  56,000Finished Goods, 35,000Required
• Determine the amount of cost in the Raw
  Materials, Work in Process, and Finished Goods
  Inventory as of the date of the storm. ( Hint
  You may wish to reconstruct the various schedules
  and statements that would have been affected by
  the companys accounts during
• the period.)Grading Rubric for Case Study
  ICategoryPointsDescriptionDocumentation
  Formatting1022Worksheet will be done in
  Excel and will contain formulas to receive maximum

4

• creditOrganization and Cohesiveness1533Calcul
  ations for all parts should be organized and
  correctly labeled.Content2045A quality case
  study will have all required work completed and
  will be correct.Total45100A quality project
  will meet or exceed all of the above
  requirements.