Straight line method of depreciation: This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset it divided equally for each year f its estimated life. The formula to calculate the deprecation under straight line method is as follows: A n n u a l S t r a i g h t l i n e d e p r e c i a t i o n = ( C o s t − S a l v a g e V a l u e ) E s t i m a t e d l i f e i n y e a r s Requirement-1: To Calculate: The depreciation for each year using the Straight Line Method

Question

Information from Hope Company's records for the year ended December 31, 2015, is available as follows: Net sales Cost of goods manufactured: $ 28,00,000 Variable $ 12,60,000 Fixed $6,30,000 Operating expenses: Variable $1,96,000 Fixed $ 2,40,000 70,000 60,000 $0 Units manufactured Units sold Finished goods inventory, 1/1/2015 Hope had no work-in-process inventories at either the beginning or end of 2015. - What would be Hope's finished goods inventory cost under the variable (direct) costing method at December 31, 2015?

Answer 1

Question

Chapter 7, Problem 7.3.1C

To determine

Concept Introduction:

Straight line method of depreciation:

This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset it divided equally for each year f its estimated life. The formula to calculate the deprecation under straight line method is as follows:

Annual Straight line depreciation = (Cost− Salvage Value)Estimated life in years

Requirement-1:

To Calculate:

The depreciation for each year using the Straight Line Method

To determine

Concept Introduction:

Straight line method of depreciation:

This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset it divided equally for each year f its estimated life. The formula to calculate the deprecation under straight line method is as follows:

Annual Straight line depreciation = (Cost− Salvage Value)Estimated life in years

Requirement-1:

To Calculate:

The depreciation for each year using the MCRS Method

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Information from Hope Company's records for the year ended December 31, 2015, is available as follows: Net sales Cost of goods manufactured: $ 28,00,000 Variable $ 12,60,000 Fixed $6,30,000 Operating expenses: Variable $1,96,000 Fixed $ 2,40,000 70,000 60,000 $0 Units manufactured Units sold Finished goods inventory, 1/1/2015 Hope had no work-in-process inventories at either the beginning or end of 2015. - What would be Hope's finished goods inventory cost under the variable (direct) costing method at December 31, 2015?

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