Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 5, Problem 5.31P
Problem 5.31
LO 7, 8
Cost flow assumptions-FIFO and LIFO using a periodic system Mower-Blower Sales Co. started business on January 20, 2016. Products sold were snow blowers and lawn mowers. Each product sold for $1,400. Purchases during 2016 were as follows:
| Blowers | Mowers | |
| January 21 | 20 @ $800 | |
| February 3 | 40 @ 780 | |
| February 28 | 30 @ 760 | |
| March 13 | 20 @ 760 | |
| April 6 | 20 @ $840 | |
| May 22 | 40 @ 860 | |
| June 3 | 40 @ 880 | |
| June 20 | 60 @ 920 | |
| August 15 | 20 @ 860 | |
| September 20 | 20 @ 840 | |
| November 7 | 20 @ 800 |
The December 31, 2016, inventory included 10 blowers and 25 mowers. Assume the company uses a periodic inventory system.
Required:
- What will be the difference between ending
inventory valuation at December 31, 2016, under the FIFO and LIFO cost flow assumptions? (Hint: Compute ending inventory under each method, and then compare results.) - If the cost of mowers had increased to $960 each by December 1, and if management had purchased 30 mowers at that time, which cost flow assumption was probably being used by the firm? Explain your answer.
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Question 18
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Current Attempt in Progress
E-Flix rents DVDS that are mailed out to customers upon demand. E-Flix has identified three activities involved in getting the videos to its
customers. Information on those activities for the month of July follows:
Estimated
Expected Use of
Cost Drivers
Cost Pools
Cost Drivers
Overhead Cost
Order taking costs
Number of orders
$20,592
187,200 orders
Technology support
Number of minutes
$11,700
234,000 minutes
Picking and shipping
Number of DVDS
$39,624
330,200 DVDS
costs
During July, the Tucker family placed 17 orders consisting of 21 DVDS. Tucker required 7 minutes of tech support. Customers pay $9.00 per
month to rent unlimited DVDS. Using ABC, how much overhead is applied to the Tucker family account for technology support?
O Some other answer
O $1.87
O $0.05
o$0.35
2:28 P
)
10/13/23
Stage 2 ABC for a Wholesale CompanyInformation is presented for the activity costs of Brighton Wholesale Company:
Activity
Cost per Unit of Activity Driver
Customer relations
$82.00 per customer per month
Selling
0.09 per sales dollar
Accounting
7.00 per order
Warehousing
0.60 per unit shipped
Packing
0.35 per unit shipped
Shipping
0.40 per pound shipped
The following information pertains to Brighton Wholesale Company's activities in Colorado for the month of June 2017:
Number of orders
320
Sales revenue
$218,000
Cost of goods sold
$98,100
Number of customers
40
Units shipped
5,400
Pounds shipped
81,000
RequiredDetermine the profitability of sales in Colorado for June 2017.Do not use a negative sign with your answers.
Profitability of Sales in Colorado
March 2017
Sales revenue
Answer
Less:
Cost of goods sold
Answer
Customer relations
Answer
Selling expenses
Answer
Accounting
Answer
Warehousing
Answer…
Cost Flow Methods
The following three identical units of Item K113 are purchased during April:
Cost
April 2
April 15
April 20
Total
Item Beta
a. First-in, first-out (FIFO)
b. Last-in, first-out (LIFO)
c. Weighted average cost
Purchase
Purchase
Purchase
Units
1
1
1
3
$
$504
Average cost per unit
$168 ($504 + 3 units)
Assume that one unit is sold on April 27 for $210. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in,
first-out (LIFO); and (c) weighted average cost method.
Gross Profit
$165
168
171
Ending Inventory
$
Chapter 5 Solutions
Accounting: What the Numbers Mean
Ch. 5 - Prob. 5.1MECh. 5 - Prob. 5.2MECh. 5 - Mini-Exercise 5.3 LO 5 Accounts receivable, bad...Ch. 5 - Mini-Exercise 5.4 LO 5 Bad debts...Ch. 5 - Mini-Exercise 5.5 LO 7, 8 Cost flow...Ch. 5 - Mini-Exercise 5.6 LO 7, 8 Cost flow...Ch. 5 - Prob. 5.7ECh. 5 - Prob. 5.8ECh. 5 - Prob. 5.9ECh. 5 - Prob. 5.10E
Ch. 5 - Exercise 5.11 LO 5 Bad debts analysis-Allowance,...Ch. 5 - Exercise 5.12 LO 5 Bad debts analysis-Allowance...Ch. 5 - Exercise 5.13 LO 5 Cash discounts-ROI Annual...Ch. 5 - Prob. 5.14ECh. 5 - Exercise 5.15 LO 6 Notes receivable-interest...Ch. 5 - Exercise 5.16 LO 6 Notes receivable-interest...Ch. 5 - Exercise 5.17 LO 7, 8 LIFO versus FIFO-matching...Ch. 5 - Prob. 5.18ECh. 5 - Prob. 5.19ECh. 5 - Prob. 5.20ECh. 5 - Exercise 5.21 LO 5, 6, 8 Transaction...Ch. 5 - Exercise 5.22 LO 5. 8, 10 Transaction...Ch. 5 - Exercise 5.23 LO 5, 6, 7 Transaction...Ch. 5 - Exercise 5.24 LO 7, 8, 10 Transaction...Ch. 5 - Prob. 5.25PCh. 5 - Prob. 5.26PCh. 5 - Problem 5.27 LO 5 Bad debts analysis-Allowance...Ch. 5 - Problem 5.28 LO 5 Bad debts analysis-Allowance...Ch. 5 - Problem 5.29 LO 5 Analysis of accounts receivable...Ch. 5 - Problem 5.30 LO 5 Analysis of accounts receivable...Ch. 5 - Problem 5.31 LO 7, 8 Cost flow assumptions-FIFO...Ch. 5 - Problem 5.32 LO 7, 8 Cost flow assumptions-FIFO,...Ch. 5 - Prob. 5.33PCh. 5 - Prob. 5.34PCh. 5 - Problem 5.35 LO 7 Effects of inventory errors If...Ch. 5 - Prob. 5.36PCh. 5 - Case 5.37 LO 5, 7, 8 Focus company-accounts...Ch. 5 - Case 5.38
LO 5, 7
Comparative analysis of current...
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