Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Company XYZ manufactures a tangible product and sells the product at wholesale. In its first year of operations, XYZ manufactured 1,000 units of product and

Company XYZ manufactures a tangible product and sells the product at wholesale. In its first year of operations, XYZ manufactured 1,000 units of product and incurred $200,000 direct material cost and $130,000 direct labor costs. For financial statement purposes, XYZ capitalized $85,000 indirect costs to inventory. For tax purposes, it had to capitalize $116,000 indirect costs to inventory under the UNICAP rules. At the end of its first year, XYZ held 260 units in inventory. In its second year of operations, XYZ manufactured 2,000 units of product and incurred $410,000 direct material cost and $275,000 direct labor costs. For financial statement purposes, XYZ capitalized $139,000 indirect costs to inventory. For tax purposes, it had to capitalize $193,000 indirect costs to inventory under the UNICAP rules. At the end of its second year, XYZ held 300 items in inventory.

  1. Required:Compute XYZ's cost of goods sold for book purposes and for tax purposes for second year assuming that XYZ uses the FIFO costing convention.
  2. Compute XYZ's cost of goods sold for book purposes and for tax purposes for second year assuming that XYZ uses the LIFO costing convention.

costing convention.

Book Tax

Cost of beginning inventory

Total cost of units produced

Cost of units available for sale$

Cost of ending inventory

Cost of goods sold$

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Accounting

Authors: Claudia Gilbertson

10th Edition

1111581169, 978-1111581169

More Books

Students also viewed these Accounting questions

Question

Pay him, do not wait until I sign

Answered: 1 week ago

Question

Speak clearly and distinctly with moderate energy

Answered: 1 week ago