This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20% of administration time, space, and expense are spent on the manufacturing process. At the end of the year, Amber's accountant indicated that the business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory. a. What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) Note: Leave no answers blank. Enter zero if applicable. Material: Mulch and packaging Material: Administrative supplies Salaries: Factory labor Salaries: Sales & advertising Salaries: Administration Property taxes Factory Property taxes: Offices Depreciation Factory Depreciation: Offices Total Inventory Costs $ Costs 660,000 27,500 1,250,000 530,000 760,000 625,000 510,000 815,000 240,000 Tax Inventory

This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20% of administration time, space, and expense are spent on the manufacturing process. At the end of the year, Amber's accountant indicated that the business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory. a. What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) Note: Leave no answers blank. Enter zero if applicable. Material: Mulch and packaging Material: Administrative supplies Salaries: Factory labor Salaries: Sales & advertising Salaries: Administration Property taxes Factory Property taxes: Offices Depreciation Factory Depreciation: Offices Total Inventory Costs $ Costs 660,000 27,500 1,250,000 530,000 760,000 625,000 510,000 815,000 240,000 Tax Inventory

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 77P: During the last five months of the year, Dwana opens a new Internet telecommunications business...

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During the last five months of the year, Dwana opens a new Internet telecommunications business called Dwan-Com. Dwan-Com bills 50,000 of revenues, but receives only 40,000 cash. Dwan-Com incurs 3,000 of supply expenses, and 41,000 of labor costs. Dwan-Com pays for 2,200 of the supplies and 38,000 of the labor costs in the current year. a. What is Dwan-Coms taxable income if it elects the cash method of accounting? b. What is Dwan-Coms taxable income if it elects the accrual method of accounting? c. What method of accounting do you recommend that Dwan-Com elect?
This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20 percent of management time, space, and expenses are spent on this manufacturing process. At the end of the year, Amber's accountant indicated that the business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory. a. What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) Note: Leave no answers blank. Enter zero if applicable. Material: Mulch and packaging Material: Administrative supplies Salaries: Factory labor Salaries: Sales and advertising Salaries: Administration Property taxes: Factory Property taxes: Offices Depreciation: Factory Depreciation: Offices Total Inventory Costs…
This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20 percent of management time, space, and expenses are spent on this manufacturing process. At the end of the year, Amber's accountant indicated that the business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory. What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) (Leave no answers blank. Enter zero if applicable.) Material: Mulch and packaging Material: Administrative supplies Salaries: Factory labor Salaries: Sales & advertising Salaries: Administration Property taxes: Factory Property taxes: Offices Depreciation: Factory Depreciation: Offices Total Inventory Costs $ Costs…
This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20 percent of management time, space, and expenses are spent on this manufacturing process. At the end of the year, Amber's accountant indicated that the business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) (Leave no answers blank. Enter zero if applicable.) Costs Tax Inventory Material: Mulch and packaging 710,000 Material: Administrative supplies 66,500 Salaries: Factory labor 1.360,000 430.000 Salaries: Sales & advertising Salaries: Administration 750,000 945,000 450,000 995,000 360,000 Property taxes: Factory…
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