Assignment 1 Answer the following question and submit it before the next class Part 1 Inventory Costing Methods:

Question 1 (3% weigtage: % each)

True Blue Corporation sold 5,500 units of its product at $45 per unit in year 2010. It began the year with 600 units in inventory and made successive purchases of its products as follows: January 1 Feb. 20 May 16 Oct. 3 Dec. 11 Beginning inventory Purchase Purchase Purchase Purchase 600 units @ $18 per unit 1,500 units @ $19 per unit 700 units @ $20 per unit 400 units @ $21 per unit 3,300 units @ $22 per unit

a) Calculate the cost of goods sold and value of inventory under FIFO, LIFO and weighted average cost method. b) How would the financial results from using the three alternative inventory costing methods change if True Blue had been experiencing declining costs in its purchases of inventory? c) What advantages and disadvantages are offered by using (a) LIFO and (b) FIFO? Assume the continuing trend of increasing costs

Depreciation Methods Question 2

On January 1, 2007, Jansing Corporation acquired a new machine with an estimated useful life of 5 years. The cost of the equipment was $40,000 with a residual value of $5,000. a) Calculate the yearly depreciation according to Straight-line Method and Reducingbalance Method (rate of depreciation for Reducing-balance Method is 40%) b) Assume that the machine used was owned by a business that made a profit before depreciation of $15,000 for each of the five years in which the asset was held. Calculate the profit for the business for each year under each depreciation method, and comment on your findings.

Chapter 1
Question 3

Evans Inc., had the following activities during 2010: Direct materials: Beginning inventory $ 40,000 Purchases 123,200 Ending inventory 20,800 Direct manufacturing labor 32,000 Manufacturing overhead 24,000 Beginning work-in-process inventory 1,600 Ending work-in-process inventory 8,000 Beginning finished goods inventory 48,000 Ending finished goods inventory 32,000 Required: a. What is the cost of direct materials used during 2010? b. What is cost of goods manufactured for 2010? c. What is cost of goods sold for 2010? d. What amount of prime costs was added to production during 2010? e. What amount of conversion costs was added to production during 2010?

Question 4

Following is the account balances of (in thousands) for the Canseco Company
Canseco Company Direct materials inventory Work-in-process inventory Finished goods inventory Purchases of direct materials Direct manufacturing labor Indirect manufacturing labor Plant Insurance Depreciation -- plant and building, and equipment Repairs and maintenance -- plant Marketing, distribution, and customer-service costs General and administrative costs Beginning of 2010 $22,000 21,000 18,000 End of 2010 $26,000 20,000 23,000 75,000 25,000 15,000 9,000 11,000 4,000 93,000 29,000

a) Prepare a schedule for the cost of goods manufactured for 2010 b) Revenues for 2010 were $300 million. Prepare the income statement for 2010.

Chapter 2
Question 5

Connelly, inc., a manufacturer of quality electric ice cream makers, has experienced a steady growth in sales over the past few years. Since her business has grown, Jan DeJaney, the president, believes she needs an aggressive advertising campaign next year to maintain the companys growth. To prepare for the growth, the accountant prepared the following data for the current year. Variable costs per ice cream maker: Direct labor Direct material Variable overhead Total variable costs Fixed costs: Manufacturing Selling Administrative Total fixed costs Selling price per unit Expected sales (units) Required 1. If the costs and sales price remain the same, what is the projected operating profit for the coming year? 2. What is the breakeven point in units for the coming year? 3. Jan has set the sales target for 35,000 ice creams makers which she thinks she can achieve by an additional fixed selling expense of $200,000 for advertising. All other costs remain as in requirement 1. What will be the operating profit if the additional $ 200,000 is spent on advertising and sales rise to 35,000 units? 4. What will be the new breakeven point if the additional $200,000 is spent on advertising? 5. If the additional $200,000 is spent for advertising in the next year, what is the required sales level in units to equal the current years income at 30,000 units? $ 13.50 $14.50 $6.00 $34.00

$ 82,500 $42,000 356,000 $480,500 $ 65.00 30,000

Question 6

Jeffrey Company produces and sells socks. Variable costs are $3 per pair, and fixed costs for the year total$ 75,000. The selling price is $5 per pair.

Required: calculate the following 1. The breakeven points in units 2. The breakeven points in sales dollars 3. The units required to make a before-tax profit of $10,000 4. The sales in dollars required to make a before-tax profit of $8,000