Question 17

In its first year of operations, Lima Company manufactured 500 widgets, incurring direct materials and labor costs of $100,000. For book purposes, Lima capitalized $50,000 of indirect manufacturing costs. For tax purposes, it had to capitalize $80,000 of indirect costs under the UNICAP rules. At the end of the year, Lima had 70 widgets remaining in inventory. Compute cost of goods sold for book and tax purposes.

Group of answer choices

Book cost of goods sold $129,000; Tax cost of goods sold $154,800.

Book cost of goods sold $150,000; Tax cost of goods sold $180,000.

Book cost of goods sold $154,800; Tax cost of goods sold $129,000.

Book cost of goods sold $25,200; Tax cost of goods sold $21,000.