Chapter 7 Homework
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1,500 units of product and incurred $300,000 direct material cost and $195,000 direct labor costs. For financial statement purposes,
XYZ capitalized $127,500 indirect costs to inventory. For tax purposes, it had to capitalize $174,000 indirect costs to inventory under
the UNICAP rules. At the end of its first year, XYZ held 360 units in inventory. In its second year of operations, XYZ manufactured
3,000 units of product and incurred $645,000 direct material cost and $412,500 direct labor costs. For financial statement purposes,
XYZ capitalized $208,500 indirect costs to inventory. For tax purposes, it had to capitalize $289,500 indirect costs to inventory under
the UNICAP rules. At the end of its second year, XYZ held 400 items in inventory.
Required:
a. Compute XYZ's cost of goods sold for book purposes and for tax purposes for second year assuming that XYZ uses the FIFO
costing convention.
b. Compute XYZ's cost of goods sold for book purposes and for tax purposes for second year assuming that XYZ uses the LIFO
costing convention.
Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Required A Required B
Compute XYZ's cost of goods sold for book purposes and for tax purposes for second year assuming that XYZ uses the LIFO
costing convention.
Note: Round down the number of units to whole number.
Book
Tax
Cost of beginning inventory
S
149,400 $
160,560
Total cost of units produced
1,266,000 1,347,000
Cost of units available for sale
$ 1,415,400 $ 1,507,560
Cost of ending inventory
(168,800)
178,400
Cost of goods sold
$ 1,246,600
$ 1,329,160