Loose Leaf For Fundamentals Of Financial Accounting

6th Edition

ISBN: 9781260159547

Author: Phillips Associate Professor, Fred, Libby, Robert, Patricia

Publisher: McGraw-Hill Education

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…

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Textbook Question

Chapter 7, Problem 9E

Choosing LIFO versus FIFO When Costs Are Rising and Falling

Use the following information to complete this exercise: sales, 550 units for 512,500; beginning inventory 300 units; purchases, 400 units; ending inventory, 150 units; and operating expenses, $4,000. Begin by setting up the following table and then complete the requirements that follow.

Chapter 7, Problem 9E, Choosing LIFO versus FIFO When Costs Are Rising and Falling Use the following information to

Required:

1. Complete the table for each situation. In Situations A and B (costs rising), assume the following: beginning inventory, 300 units at $12 = $3,600; purchases, 400 units at $13 $5,200. In Situations C and D (costs falling), assume the opposite; that is, beginning inventory, 300 units at $13 = $3,900; purchases, 400 units at $12 = $4,800. Use periodic inventory procedures.
2. Describe the relative effects on Income from Operations as demonstrated by requirement 1 when costs are rising and when costs are falling.
3. Describe the relative effects on Income Tax Expense for each situation.

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Chapter 7, Problem 8E

Chapter 7, Problem 10E

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A fixture company manufactures products brass products in a small manufacturing facility that has 40 employees. Each employee provides 36 hours of labor per week. Determine the total direct materials cost variance using the information given in the table. Standard wage per hour Standard labor time per unit Standard number of lbs. of brass Standard price per lb. of brass Actual price per lb. of brass Actual lbs. of brass used during the weel Number of units produced during the week Actual wage per hour Actual hours for the week $ 14.4 20 minutes 1.3 lbs. $ 10.75 $ 11 12,051 lbs. 9,000 $ 14.83 $ 1,440 hours

Jenson Ltd. recently reported a net income of $5,320 and depreciation of $970. How much was its net cash flow, assuming it had no amortization expense and sold none of its fixed assets?

Chapter 7 Solutions

Loose Leaf For Fundamentals Of Financial Accounting

Ch. 7 - What are three goals of inventory management?Ch. 7 - Describe the specific types of inventory reported...Ch. 7 - The chapter discussed four inventory costing...Ch. 7 - Which inventory cost flow method is most similar...Ch. 7 - Where possible, the inventory costing method...Ch. 7 - Contrast the effects of LIFO versus FIFO on ending...Ch. 7 - Contrast the income statement effect of LIFO...Ch. 7 - Several managers in your company are experiencing...Ch. 7 - Explain briefly the application of the LCM rule to...Ch. 7 - Prob. 10Q

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Solution Summary: The author explains the income statement and cost of goods sold calculation under FIFO, LIFO and weighted average costing method.

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Chapter 7 Solutions