Answer
Finished goods inventory, 3/31/2014 = 580,000 - 415,000 = 165,000
Work Step by Step
Cost of goods manufactured = 4 * Direct materials used
Cost of goods manufactured = 420,000 (given)
Direct materials used = 420,000 / 4 = 105,000
Cost of goods sold = Revenues * (1 - Gross margin percentage)
Cost of goods sold = 518,750 * (1 - 0.20) = 415,000
Cost of goods available for sale = Beginning finished goods inventory + Cost of goods manufactured
Cost of goods available for sale = 160,000 (given) + 420,000 = 580,000
Finished goods inventory, 3/31/2014 = Cost of goods available for sale - Cost of goods sold
