The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed. To state: The treatment of liquidating dividends under cost and equity method.

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Chapter 2, Problem 2.7Q

To determine

Introduction:The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed.

To state: The treatment of liquidating dividends under cost and equity method.

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Activity Based Costing - practice problem Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities 1. Materials handling 2. Machine setups Cost Drivers Number of requisitions Number of setups Total cost $35,000 27,500 3. Quality inspections Number of inspections 27,000 $89.500 The cost driver volume for each product was as follows: Cost Drivers Instruments Gauge Total Number of requisitions 400 600 1,000 Number of setups 200 300 500 Number of inspections 200 400 600 Insructions (a) Determine the overhead rate for each activity. (b) Assign the manufacturing overhead costs for April to the two products using activity-based costing.

Bodhi Company has three cost pools and two doggie products (leashes and collars). The activity cost pool of ordering has the cost drive of purchase orders. The activity cost pool of assembly has a cost driver of parts. The activity cost pool of supervising has the cost driver of labor hours. The accumulated data relative to those cost drivers is as follows: Expected Use of Estimated Cost Drivers by Product Cost Drivers Overhead Leashes Collars Purchase orders $260,000 70,000 60,000 Parts 400,000 300,000 500,000 Labor hours 300,000 15,000 10,000 $960,000 Instructions: (a) Compute the activity-based overhead rates. (b) Compute the costs assigned to leashes and collars for each activity cost pool. (c) Compute the total costs assigned to each product.

Torre Corporation incurred the following transactions. 1. Purchased raw materials on account $46,300. 2. Raw Materials of $36,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,800 was classified as indirect materials. 3. Factory labor costs incurred were $55,900, of which $51,000 pertained to factory wages payable and $4,900 pertained to employer payroll taxes payable. 4. Time tickets indicated that $50,000 was direct labor and $5,900 was indirect labor. 5. Overhead costs incurred on account were $80,500. 6. Manufacturing overhead was applied at the rate of 150% of direct labor cost. 7. Goods costing $88,000 were completed and transferred to finished goods. 8. Finished goods costing $75,000 to manufacture were sold on account for $103,000. Instructions Journalize the transactions.

Answer 2

Question

Chapter 2, Problem 2.7Q

To determine

Introduction:The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed.

To state: The treatment of liquidating dividends under cost and equity method.

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Answer 3

Question

Chapter 2, Problem 2.7Q

To determine

Introduction:The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed.

To state: The treatment of liquidating dividends under cost and equity method.

Expert Solution & Answer

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Answer 4

Question

Chapter 2, Problem 2.7Q

To determine

Introduction:The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed.

To state: The treatment of liquidating dividends under cost and equity method.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 2, Problem 2.7Q

To determine

Introduction:The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed.

To state: The treatment of liquidating dividends under cost and equity method.

Answer 6

Chapter 2, Problem 2.7Q

To determine

Introduction:The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed.

To state: The treatment of liquidating dividends under cost and equity method.

Answer 7

Chapter 2, Problem 2.7Q

To determine

Introduction:The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed.

To state: The treatment of liquidating dividends under cost and equity method.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 2 - What types of investments in common stock normally...Ch. 2 - Prob. 2.2AQ Ch. 2 - When is equity method reporting considered...Ch. 2 - Prob. 2.4Q Ch. 2 - Prob. 2.5Q Ch. 2 - Prob. 2.6Q Ch. 2 - Prob. 2.7Q Ch. 2 - Prob. 2.8Q Ch. 2 - How does carrying securities at fair value...Ch. 2 - How does the fully adjusted equity method differ...

The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed. To state: The treatment of liquidating dividends under cost and equity method.

Solution Summary: The author explains that the cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the 'equity method' is a way by which externals are informed.

Videos

Introduction:The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed.

To state: The treatment of liquidating dividends under cost and equity method.

Want to see the full answer?

Chapter 2 Solutions

The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed. To state: The treatment of liquidating dividends under cost and equity method.

Solution Summary: The author explains that the cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the 'equity method' is a way by which externals are informed.

Videos

Introduction:The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed. To state: The treatment of liquidating dividends under cost and equity method.

Want to see the full answer?

Chapter 2 Solutions

Introduction:The cost method is used for reporting investments in securities when the equity method and consolidation reporting are inapt, whereas, the equity method is a way by which externals are informed.

To state: The treatment of liquidating dividends under cost and equity method.