Reference no: EM132406895

Question

1. 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:

Inventory at Respective Relevant Price Index

Year Ended December 31 Year-end Prices (Base Year 2012)

2012 $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.

2. Information from Hope Company's records for the year ended December 31, 2015 is available as follows:

Net sales $2,800,000

Cost of goods manufactured

Variable $1,260,000

Fixed $630,000

Operating expenses:

Variable $196,000

Fixed $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.

a. What would be Hope's finished goods inventory cost under the variable (direct) costing method at December 31, 2015?

b. What would Hope's operating income be under the absorption costing method?

3. 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:

Date Purchases Sales

January 9 200 @ $75

January 14 100 @ $47

January 23 75 @ $76

January 25 100 @ $48

January 30 75 @ $77

Tool City does not maintain perpetual inventory records. According to a physical count, 150 cordless screwdrivers were on hand at January 31, 2015.

a. What is the cost of the inventory at January 31, 2015 under the FIFO method?

b. What is the cost of the inventory at January 31, 2015 under the LIFO method?

c. 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?