Question

company XYZ manufactures a tangible product and sells the product at wnolesale in its first year of operations, XYZ manufacturea 1,100 units of product and incurred $220,000 direct material cost and $129,250 direct labor costs. For financial statement purposes, XYZ capitalized $84,250 indirect costs to inventory. For tax purposes, it had to capitalize $115,250 indirect costs to inventory under the UNICAP rules. At the end of its first year, XYZ held 110 units in inventory. In its second year of operations, XYZ manufactured 2,200 units of product and incurred $451,000 direct material cost and $275,000 direct labor costs. For financial statement purposes, XYZ capitalized $139,000 indirect costs to inventory. For tax purposes, it had to capitalize $193,000 indirect costs to inventory under the UNICAP rules. At the end of its second year, XYZ held 330 items in inventory. 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. 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 FIFO costing convention. (Do not round intermediate calculations.) Book Tax Cost of beginning inventory Total cost of units produced Cost of units available for sale Cost of ending inventory 0 $

Answer 1

Answer- Year-i (1100 units ) :- For book purpose: Total Direct cost = $220.000 + $129.250 - $ 349,250 Direct Cost- perunit : $349,250) - $317.5 perc Total Indirect cost = $84.250 Indirect cost perunit - $84,250%. = $ 76.59. per unit Full cost per unit : $317.5+ $ 76.59 = $ 394.09 per unit For Tax purpose : Total Direct cost = $220.000+ $129,950 = $349,850 Direct cost peruenit : $ 349,250% = $317.5 peruenit Total Indirect cost = $ 115,250 Indirect cost per unit - $ 115,250% = $104.77 perunit Full cox per unit = $317.5+ $ 104.77 = $422.27 per unit 4ear-2/2200_umita) :- For book purpose :- Total Direct costa $451,000 +$ 275,000 - $726,000 Direct cost per unit = $ 726,000/n = $330 per unit Total Indirect cost = $139,000 Indirect cost per unit = $119,00% = $63.18 percenit For Tax purpose Total Direct cost=$ 451,000 + $ 275,000 = $ 726,000 Direct cost perunit = $726,000/2200,- $ 230 perunit Iotal Indirect cost = $193000 Indirect cost per unit = $ 193,000 com $6773 per unit Full cost perunit = $330 + $65.18 = $4.17.73 per cenit

A) FIFO Method:- particulars cost of Beginning Inventory sotal cost of cemits produced Book Tax $43,349.9 1 $ 46,449.7 $394.09*$10] $499.27X110] $864,996 $919,006 $393.18*2200] $41773x2200) $908,3459 | $965,455.7 $129,749.4 $137,850.9 $393.1873307 $417. 234 1307 $778,596.5 $ 827,604.8 Cost of units available for sale Leat Cost of ending inventory cost of goods sold.

<) LIFO Method: particulars Cost of Beginning Inventory Taz. Het Total cost of units produced Cost units available for Sale Less cost of Ending inventory Book $ H9349.9 $ 46,449.7 1994.09x1107 422.177/6] $ 864996 $919006 $$393.18x29001417B%2200] $908345.9 $965455.7 $129849.5 $138339.3 693.18x900)+2417.73x220) 89409x 110] +(422.17X110) $778 496.4 $827116.4 I cost of goods sold.