According to the Fall 2002 issue of Journal of of Property Valuation and Taxation, several methods of tracking inventory costs are available, such as FIFO, LIFO, average, and specific identification. Accountants may use any of the methods as long as they are consistent and the amount is properly reflected on the financial statements. In good accounting, the income statement is thought to be more important than the balance sheet, the best choice would be that which best measures the income of the business. Using LIFO, ending inventory was $225,000. Using FIFO ending inventory was $205,000. Using the weighted-average, ending inventory was $215,000. The cost of goods available for sale was $535,000. (a) What would be the cost of goods sold using LIFO? (b) What would be the cost of goods sold using FIFO? (c) What would be the cost of goods sold using weighted-average?
The November 2002 issue of The Journal of Light Construction reported on allocating overhead based on sales volume. Grant's Construction had overhead costs of $75,000 per year. Tom Richard's had total sales of $250,000, Bob Larsen had total sales of $325,000, and Janet McKenzie had sales of $425,000. What amount of the overhead costs would be charged to each person?
An issue of Tax Adviser reported on tax consequences using LIFO versus FIFO methods. Mountain State Ford used the LIFO inventory method for its parts and accessories (parts) inventory. The following purchases were made: 60 spark plugs at $.70 each, 40 spark plugs at $.73 each, 45 spark plugs at $.75 each and 30 spark plugs at $.80 each. A recent inventory indicated 85 spark plugs were still in stock. What would be the cost of the ending inventory using LIFO and FIFO?
A local New Hampshire outlet made the following wholesale purchases of new Sketchers running shoes. September 1, 15 pairs at $80.00; November 5, 18 pairs at $80.50; and December 4, 8 pairs at $83.95. An inventory taken last week indicates that 19 pairs are still in stock. Calculate the cost of ending inventory by LIFO and calculate the cost of goods sold.
A Forbes magazine article had the following title: "Overhead Can Kill You." The article stated: "You dine with three colleagues. You skip cocktails and dessert and have a salad. The others have drinks and three courses. When the check arrives, the group divides the total by four and you get hit with $27. For a skimpy salad? Yep, that was the allocation plan." Instead of allocating the same percentage to everyone as in the above example, ABC Company bases allocation on consumption. The overhead for invoicing is $500. Division A has 20,000 customers and Division B has 500 customers. What amount of the overhead should be charged to Division A and what amount to Division B? Round to the nearest whole percent.
Matty's Toy Shop has a beginning inventory of 15 sets of paints at a cost of $1.88 each. During the year, Matty's Toy Shop purchased 8 sets at $2.15, 12 sets at $2.28, 16 sets at $3.01 and 18 sets at $3.48. By the end of the year, 40 sets were sold. Calculate (a) the number of paint sets in stock and (b) the cost of ending inventory under LIFO.
Marvin Company allocates overhead expenses to all departments on the basis of floor space (square feet) occupied by each department. The total overhead expenses for a recent year were $160,000. Department A occupied 8,000 square feet; Department B , 14,000 square feet; and Department C, 9,000 square feet. What is the overhead allocated to Department C? In your calculations, round to the nearest whole percent.
Books.com has a beginning inventory costing $90,000 and an ending inventory costing $75,000. Sales for the year were $40,000. Assume Books.com's markup rate on selling price is 65%. Based on the selling price, what is the inventory turnover at cost? Round to the nearest hundredth.
Lane's Dress Shop inventory at cost on January 1 was $66,800. Its retail value is $85,900. During the year, Lane purchased additional merchandise at a cost of $300,000 with a retail value of $450,000. The net sales at retail for the year were $410,000. Calculate Lane's inventory at cost by the retail method. Round the cost ratio to the nearest whole percent.
On January 1, Ron Company had an inventory costing $90,000. During January, Ron had net purchases of $185,900. Over recent years, Ron's gross profit in January has averaged 55% on sales. The company's net sales in January were $199,900. Calculate the estimated cost of ending inventory using the gross profit method.
