Participant materials 1: BTS Elective: UNICAP Exercise 1: Allocating mixed service costs

Participant materials 3 BTS Elective UNICAP. Exercise 3 Simplified resale method

Participant materials 1: BTS Elective: UNICAP Exercise 1: Allocating mixed service costs Instructions Spend a few minutes reading through the exercise. Work together as a team to complete the requirements. Elect a spokesperson for your table. Facts Big Pane Inc., a manufacturer of custom designed glass windows, has: Total 263A labor costs $6 million (excluding mixed service costs) Total labor costs $15 million, including $3 million of mixed service labor costs Total 263A production costs $10 million (excluding mixed service costs) Total costs $30 million (excluding mixed service costs) Total mixed service costs $5 million Required 1. What amount of mixed service costs would Big Pane treat as being capitalizable using the simplified service cost method with a production cost allocation ratio? 2. What amount of mixed service costs would Big Pane treat as being capitalizable using the simplified service cost method with a labor-based allocation ratio? 3. Based on your answers above, which allocation ratio should Big Pane prefer for allocating its mixed service costs? BTS Elective 1 2013 EYGM Limited Participant materials 3: BTS Elective: UNICAP Exercise 3: Simplified resale method Instructions Spend a few minutes reading through the exercise. Work together as a team to complete the requirements. Elect a spokesperson for your table. Facts Nice Threads Co., a retailer of fine clothing, has: Item Cost Section 263A purchasing costs $2,200,000 Section 263A storage and handling costs $800,000 Section 471 costs for current year purchases $44,000,000 Section 471 costs in beginning inventory $36,000,000 Total 471 costs in ending FIFO inventory $20,000,000 Required 1. If Nice Thread uses the simplified resale method, then: What is its purchasing absorption ratio? What is its storage and handling absorption ratio? 2. What is its UNICAP adjustment for the current year? BTS Elective 1 2013 EYGM Limited