Judgment Case 8–3 The specific identification inventory method; inventoriable costs • LO8–3, LO8–4 Happlia Co. imports household appliances. Each model has many variations and each unit has an identification number. Happlia pays all costs for getting the goods from the port to its central warehouse in Des Moines. After repackaging, the goods are consigned to retailers. A retailer makes a sale, simultaneously buys the appliance from Happlia, and pays the balance due within one week. To alleviate the overstocking of refrigerators at a Minneapolis retailer, some were reshipped to a Kansas City retailer where they were still held in inventory at December 31, 2018. Happlia paid the costs of this reshipment. Happlia uses the specific identification inventory costing method. Required: 1. In regard to the specific identification inventory costing method: a. Describe its key elements. b. Discuss why it is appropriate for Happlia to use this method. 2. a. What general criteria should Happlia use to determine inventory carrying amounts at December 31, 2018? b. Give four examples of costs included in these inventory carrying amounts. 3. What costs should be reported in Happlia’s 2018 income statement? Ignore lower of cost or market considerations.
Judgment Case 8–3 The specific identification inventory method; inventoriable costs • LO8–3, LO8–4 Happlia Co. imports household appliances. Each model has many variations and each unit has an identification number. Happlia pays all costs for getting the goods from the port to its central warehouse in Des Moines. After repackaging, the goods are consigned to retailers. A retailer makes a sale, simultaneously buys the appliance from Happlia, and pays the balance due within one week. To alleviate the overstocking of refrigerators at a Minneapolis retailer, some were reshipped to a Kansas City retailer where they were still held in inventory at December 31, 2018. Happlia paid the costs of this reshipment. Happlia uses the specific identification inventory costing method. Required: 1. In regard to the specific identification inventory costing method: a. Describe its key elements. b. Discuss why it is appropriate for Happlia to use this method. 2. a. What general criteria should Happlia use to determine inventory carrying amounts at December 31, 2018? b. Give four examples of costs included in these inventory carrying amounts. 3. What costs should be reported in Happlia’s 2018 income statement? Ignore lower of cost or market considerations.
Solution Summary: The author explains the specific identification costing method used by Company H to determine inventory carrying amounts at December 31, 2018.
The specific identification inventory method; inventoriable costs
• LO8–3, LO8–4
Happlia Co. imports household appliances. Each model has many variations and each unit has an identification number. Happlia pays all costs for getting the goods from the port to its central warehouse in Des Moines. After repackaging, the goods are consigned to retailers. A retailer makes a sale, simultaneously buys the appliance from Happlia, and pays the balance due within one week.
To alleviate the overstocking of refrigerators at a Minneapolis retailer, some were reshipped to a Kansas City retailer where they were still held in inventory at December 31, 2018. Happlia paid the costs of this reshipment. Happlia uses the specific identification inventory costing method.
Required:
1. In regard to the specific identification inventory costing method:
a. Describe its key elements.
b. Discuss why it is appropriate for Happlia to use this method.
2. a. What general criteria should Happlia use to determine inventory carrying amounts at December 31, 2018?
b. Give four examples of costs included in these inventory carrying amounts.
3. What costs should be reported in Happlia’s 2018 income statement? Ignore lower of cost or market considerations.
Opereting cash flow if the tax rate in 34 percent?
Manufacturing overhead is applied based on budgeted direct labor hours. The direct labor budget indicates that 6,200 direct labor hours will be required during the year. The variable overhead rate is $4.10 per direct labor hour. The company's budgeted fixed manufacturing overhead is $92,500 per year, which includes depreciation of $18,400. All other fixed manufacturing overhead costs represent current cash flows. The predetermined overhead rate would be_.help
Manufacturing overhead is applied based on budgeted direct labor hours. The direct labor budget indicates that 6,200 direct labor hours will be required during the year. The variable overhead rate is $4.10 per direct labor hour. The company's budgeted fixed manufacturing overhead is $92,500 per year, which includes depreciation of $18,400. All other fixed manufacturing overhead costs represent current cash flows. The predetermined overhead rate would be_.
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