Cost Accounting
Cost Accounting
15th Edition
ISBN: 9780133428834
Author: Horngren
Publisher: PEARSON
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Chapter 12, Problem 12.29E

1.

To determine

To calculate: The amount and cost of unused software-implementation support capacity

Given information:

Actual units of capacity at starting of 2013 is 70 units

Actual job units used to produce the output in 2013 is 55 units.

2.

To determine

To calculate: The maximum amount of cost that C could save in 2013 by downsizing software-implementation support capacity.

Given information:

Price per unit of capacity is $3,600

Downsizing the software-implementation support capacity by 15 units

3.

To determine

To identify: The reason not to downsize the capacity

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Michael McDowell Co. establishes a $108 million liability at the end of 2025 for the estimated site-cleanup costs at two of its manufacturing facilities. All related closing costs will be paid and deducted on the tax return in 2026. Also, at the end of 2025, the company has $54 million of temporary differences due to excess depreciation for tax purposes, $7.56 million of which will reverse in 2026. The enacted tax rate for all years is 20%, and the company pays taxes of $34.56 million on $172.80 million of taxable income in 2025. McDowell expects to have taxable income in 2026. Assuming that the only deferred tax account at the beginning of 2025 was a deferred tax liability of $5,400,000, draft the income tax expense portion of the income statement for 2025, beginning with the line "Income before income taxes." (Hint: You must first compute (1) the amount of temporary difference underlying the beginning $5,400,000 deferred tax liability, then (2) the amount of temporary differences…
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