FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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subject-Accounting

This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20 percent of management
time, space, and expenses are spent on this manufacturing process. At the end of the year, Amber's accountant indicated that the
business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory.
What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct
costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent
and then according to level of ending inventory.) (Leave no answers blank. Enter zero if applicable.)
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Transcribed Image Text:This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20 percent of management time, space, and expenses are spent on this manufacturing process. At the end of the year, Amber's accountant indicated that the business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory. What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) (Leave no answers blank. Enter zero if applicable.)
Material: Mulch and packaging
Material: Administrative supplies
Salaries: Factory labor
Salaries: Sales & advertising
Salaries: Administration
Property taxes: Factory
Property taxes: Offices
Depreciation: Factory
Depreciation: Offices
Answer is not complete.
Total Inventory Costs
$
Costs
880,000
60,000
2,150,000
340,000
670,000
790,000
400,000
950,000
310,000
$
Tax
Inventory
$
LA
44,000 X
44,000
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Transcribed Image Text:Material: Mulch and packaging Material: Administrative supplies Salaries: Factory labor Salaries: Sales & advertising Salaries: Administration Property taxes: Factory Property taxes: Offices Depreciation: Factory Depreciation: Offices Answer is not complete. Total Inventory Costs $ Costs 880,000 60,000 2,150,000 340,000 670,000 790,000 400,000 950,000 310,000 $ Tax Inventory $ LA 44,000 X 44,000
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