Intermediate Accounting Assignment
Part A - The Bravo Company manufactures a single product. On December 31, 2012 Bravo adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was determined to be $500,000. Inventory data for succeeding years are as follows:
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Year Ended December 31
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Inventory at Respective Year-end Prices
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Relevant Price Index(Base Year 2012)
|
|
2012
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$500,000
|
1.00
|
|
2013
|
527,000
|
1.08
|
|
2014
|
635,000
|
1.15
|
|
2015
|
645,000
|
1.21
|
Compute the inventory amount at December 31, 2013, 2014, and 2015 using the dollar-value LIFO inventory method for each year.
Part B - Information from Hope Company's records for the year ended December 31, 2015 is available as follows:
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Net sales
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$2,800,000
|
|
Cost of goods manufactured:
|
|
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Variable
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$1,260,000
|
|
Fixed
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$630,000
|
|
Operating expenses:
|
|
|
Variable
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$196,000
|
|
Fixed
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$240,000
|
|
Units manufactured
|
70,000
|
|
Units sold
|
60,000
|
|
Finished goods inventory, 1/1/2015
|
$0
|
Hope had no work-in-process inventories at either the beginning or end of 2015.
- What would be Hope's finished goods inventory cost under the variable (direct) costing method at December 31, 2015?
- What would Hope's operating income be under the absorption costing method?
Part C - Tool City, Inc. had 300 cordless screwdrivers on hand at January 1, 2015 costing $45 each. Purchases and sales of cordless screwdrivers during the month of January were as follows:
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Date
|
Purchases
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Sales
|
|
January 9
|
|
200 @ $75
|
|
January 14
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100 @ $47
|
|
|
January 23
|
|
75 @ $76
|
|
January 25
|
100 @ $48
|
|
|
January 30
|
|
75 @ $77
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Tool City does not maintain perpetual inventory records. According to a physical count, 150 cordless screwdrivers were on hand at January 31, 2015.
- What is the cost of the inventory at January 31, 2015 under the FIFO method?
- What is the cost of the inventory at January 31, 2015 under the LIFO method?
- What is the cost of the inventory at January 31, 2015 under the FIFO method if only 145 cordless screwdrivers were on hand at the time of the physical count?