First-in First-Out method (FIFO) : In First-in-First-Out method, the costs of initial purchased items are sold first. The value of the ending inventory consists of the recent purchased items. Last-in First-Out method (LIFO): In Last-in-First-Out method, the costs of last purchased items are sold first. The value of the closing stock consists of the initial purchased items. Straight-line Depreciation : Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the salvage value is shown as below: Depreciation cost = ( Cost of the asset-Salvage value ) Estimated useful life of the asset Declining-balance depreciation: It is an accelerated method of depreciation under which the depreciation declines in each successive year until the value of asset becomes zero. Under this method, the book value (original cost less accumulated depreciation ) of the long-term asset is decreased by a fixed rate. It is double the rate of the straight-line depreciation. Use the following formula to determine the annual depreciation: Annual depreciation = Purchase price × ( 2 Useful life ) To determine: Use of FIFO instead of LIFO

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Answer 1

Question

Chapter 13, Problem 6Q

a)

To determine

First-in First-Out method (FIFO): In First-in-First-Out method, the costs of initial purchased items are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in First-Out method (LIFO): In Last-in-First-Out method, the costs of last purchased items are sold first. The value of the closing stock consists of the initial purchased items.

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the salvage value is shown as below:

Depreciation cost = (Cost of the asset-Salvage value)Estimated useful life of the asset

Declining-balance depreciation:

It is an accelerated method of depreciation under which the depreciation declines in each successive year until the value of asset becomes zero. Under this method, the book value (original cost less accumulated depreciation) of the long-term asset is decreased by a fixed rate. It is double the rate of the straight-line depreciation. Use the following formula to determine the annual depreciation:

Annual depreciation = Purchase price × (2Useful life)

To determine: Use of FIFO instead of LIFO

b)

To determine

Use of 6-year life instead of 9-year life machinery.

c)

To determine

To determine: Use of depreciation method

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Scarce resource; discontinued product lines; negative contribution marginThe officers of Bardwell Company are reviewing the profitability of the company’s four products and the potential effects of several proposals for varying the product mix. The following is an excerpt from the income statement and other data. Total Product P Product Q Product R Product S Sales $62,600 $10,000 $18,000 $12,600 $22,000 Cost of goods sold (44,274) (4,750) (7,056) (13,968) (18,500) Gross profit $18,326 $5,250 $10,944 $(1,368) $3,500 Operating expenses (12,004) (1,990) (2,968) (2,826) (4,220) Income before taxes 6,322 $3,260 $7,976 $(4,194) $(720) Units sold 1,000 1,200 1,800 2,000 Sales price per unit $10.00 $15.00 $7.00 $11.00 Variable cost of goods sold 2.50 3.00 6.50 6.00 Variable operating expenses 1.17 1.25 1.00 1.20 Each of the following proposals is to be considered independently of the other proposals. Consider only the product changes stated in each…

Analyzing one company's make or buy and special order proposals OneCo is a retail organization in the Northeast that sells upscale clothing. Each year, store managers (in consultation with their supervisors) establish financial goals; a monthly reporting system captures actual performance. OneCo Inc. produces a single product. Cost per unit, based on the manufacture and sale of 10,000 units per month at full capacity, is shown below. Product costs Direct materials $4.00 Direct labor 1.30 Variable overhead 2.50 Fixed overhead 3.40 Sales commission 0.90 $12.10 The $0.90 sales commission is paid for every unit sold through regular channels. Market demand is such that OneCo is operating at full capacity, and the firm has found it can sell all it can produce at the market price of $16.50. Currently, OneCo is considering two separate proposals: · Gatsby, Inc. has offered to buy 1,000 units at $14.35 each. Sales commission would be $0.35 on this special order. ·…

MYS App Ch 1 M Ques M X Chat Use ta gaut Soluta acco a webs a wear a acco calcuTelesa Requ /ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fconnect.mheducation.com%252Fconnect ework i ces Saved [The following information applies to the questions displayed below.] The first production department in a process manufacturing system reports the following unit data. Beginning work in process inventory Units started and completed 35,200 units 52,800 units Units completed and transferred out Ending work in process inventory 88,000 units 17,900 units Help Save & Exercise 16-4 (Algo) Weighted average: Computing equivalent units LO P1 Prepare the production department's equivalent units of production for direct materials under each of the following three separate assumptions using the weighted average method for process costing. Equivalent Units of Production (EUP)-Weighted Average Method 1. All direct materials are added to products when…

Answer 2

Question

Chapter 13, Problem 6Q

a)

To determine

First-in First-Out method (FIFO): In First-in-First-Out method, the costs of initial purchased items are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in First-Out method (LIFO): In Last-in-First-Out method, the costs of last purchased items are sold first. The value of the closing stock consists of the initial purchased items.

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the salvage value is shown as below:

Depreciation cost = (Cost of the asset-Salvage value)Estimated useful life of the asset

Declining-balance depreciation:

It is an accelerated method of depreciation under which the depreciation declines in each successive year until the value of asset becomes zero. Under this method, the book value (original cost less accumulated depreciation) of the long-term asset is decreased by a fixed rate. It is double the rate of the straight-line depreciation. Use the following formula to determine the annual depreciation:

Annual depreciation = Purchase price × (2Useful life)

To determine: Use of FIFO instead of LIFO

b)

To determine

Use of 6-year life instead of 9-year life machinery.

c)

To determine

To determine: Use of depreciation method

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Answer 3

Question

Chapter 13, Problem 6Q

a)

To determine

First-in First-Out method (FIFO): In First-in-First-Out method, the costs of initial purchased items are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in First-Out method (LIFO): In Last-in-First-Out method, the costs of last purchased items are sold first. The value of the closing stock consists of the initial purchased items.

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the salvage value is shown as below:

Depreciation cost = (Cost of the asset-Salvage value)Estimated useful life of the asset

Declining-balance depreciation:

It is an accelerated method of depreciation under which the depreciation declines in each successive year until the value of asset becomes zero. Under this method, the book value (original cost less accumulated depreciation) of the long-term asset is decreased by a fixed rate. It is double the rate of the straight-line depreciation. Use the following formula to determine the annual depreciation:

Annual depreciation = Purchase price × (2Useful life)

To determine: Use of FIFO instead of LIFO

b)

To determine

Use of 6-year life instead of 9-year life machinery.

c)

To determine

To determine: Use of depreciation method

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Answer 4

Question

Chapter 13, Problem 6Q

a)

To determine

First-in First-Out method (FIFO): In First-in-First-Out method, the costs of initial purchased items are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in First-Out method (LIFO): In Last-in-First-Out method, the costs of last purchased items are sold first. The value of the closing stock consists of the initial purchased items.

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the salvage value is shown as below:

Depreciation cost = (Cost of the asset-Salvage value)Estimated useful life of the asset

Declining-balance depreciation:

It is an accelerated method of depreciation under which the depreciation declines in each successive year until the value of asset becomes zero. Under this method, the book value (original cost less accumulated depreciation) of the long-term asset is decreased by a fixed rate. It is double the rate of the straight-line depreciation. Use the following formula to determine the annual depreciation:

Annual depreciation = Purchase price × (2Useful life)

To determine: Use of FIFO instead of LIFO

b)

To determine

Use of 6-year life instead of 9-year life machinery.

c)

To determine

To determine: Use of depreciation method

Expert Solution & Answer

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Answer 5

Chapter 13, Problem 6Q

a)

To determine

First-in First-Out method (FIFO): In First-in-First-Out method, the costs of initial purchased items are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in First-Out method (LIFO): In Last-in-First-Out method, the costs of last purchased items are sold first. The value of the closing stock consists of the initial purchased items.

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the salvage value is shown as below:

Depreciation cost = (Cost of the asset-Salvage value)Estimated useful life of the asset

Declining-balance depreciation:

It is an accelerated method of depreciation under which the depreciation declines in each successive year until the value of asset becomes zero. Under this method, the book value (original cost less accumulated depreciation) of the long-term asset is decreased by a fixed rate. It is double the rate of the straight-line depreciation. Use the following formula to determine the annual depreciation:

Annual depreciation = Purchase price × (2Useful life)

To determine: Use of FIFO instead of LIFO

b)

To determine

Use of 6-year life instead of 9-year life machinery.

c)

To determine

To determine: Use of depreciation method

Answer 6

Chapter 13, Problem 6Q

a)

To determine

First-in First-Out method (FIFO): In First-in-First-Out method, the costs of initial purchased items are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in First-Out method (LIFO): In Last-in-First-Out method, the costs of last purchased items are sold first. The value of the closing stock consists of the initial purchased items.

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the salvage value is shown as below:

Depreciation cost = (Cost of the asset-Salvage value)Estimated useful life of the asset

Declining-balance depreciation:

It is an accelerated method of depreciation under which the depreciation declines in each successive year until the value of asset becomes zero. Under this method, the book value (original cost less accumulated depreciation) of the long-term asset is decreased by a fixed rate. It is double the rate of the straight-line depreciation. Use the following formula to determine the annual depreciation:

Annual depreciation = Purchase price × (2Useful life)

To determine: Use of FIFO instead of LIFO

Answer 7

Chapter 13, Problem 6Q

a)

To determine

First-in First-Out method (FIFO): In First-in-First-Out method, the costs of initial purchased items are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in First-Out method (LIFO): In Last-in-First-Out method, the costs of last purchased items are sold first. The value of the closing stock consists of the initial purchased items.

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the salvage value is shown as below:

Depreciation cost = (Cost of the asset-Salvage value)Estimated useful life of the asset

Declining-balance depreciation:

It is an accelerated method of depreciation under which the depreciation declines in each successive year until the value of asset becomes zero. Under this method, the book value (original cost less accumulated depreciation) of the long-term asset is decreased by a fixed rate. It is double the rate of the straight-line depreciation. Use the following formula to determine the annual depreciation:

Annual depreciation = Purchase price × (2Useful life)

To determine: Use of FIFO instead of LIFO

Answer 8

b)

To determine

Use of 6-year life instead of 9-year life machinery.

Answer 9

b)

To determine

Use of 6-year life instead of 9-year life machinery.

Answer 10

c)

To determine

To determine: Use of depreciation method

Answer 11

c)

To determine

To determine: Use of depreciation method

Answer 12

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Answer 13

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Answer 15

Ch. 13 - Prob. 1Q Ch. 13 - Prob. 2Q Ch. 13 - Prob. 3Q Ch. 13 - Prob. 4Q Ch. 13 - Prob. 5Q Ch. 13 - Prob. 6Q Ch. 13 - Prob. 7Q Ch. 13 - Prob. 8Q Ch. 13 - Prob. 9Q Ch. 13 - (a) Distinguish among the following bases of...

Solution Summary: The author explains the first-in-first-out method of depreciation, followed by the accelerated method, wherein the book value of the long-term asset is decreased by a fixed rate.

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Use of 6-year life instead of 9-year life machinery.

To determine: Use of depreciation method

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