Compute the inventory amount at december 31 2013 2014 and


Part A - The Bravo Company manufactures a single product.  On December 31, 2012 Bravo adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was determined to be $500,000.  Inventory data for succeeding years are as follows:

Year Ended December 31

Inventory at RespectiveYear-end Prices

Relevant Price Index(Base Year 2012)

2012

$500,000

1.00

2013

527,000

1.08

2014

635,000

1.15

2015

645,000

1.21

Compute the inventory amount at December 31, 2013, 2014, and 2015 using the dollar-value LIFO inventory method for each year.

Part B - Information from Hope Company's records for the year ended December 31, 2015 is available as follows:

Net sales

$2,800,000

Cost of goods manufactured:

 

     Variable

$1,260,000

     Fixed

$630,000

Operating expenses:

 

     Variable

$196,000

     Fixed

$240,000

Units manufactured

70,000

Units sold

60,000

Finished goods inventory, 1/1/2015

$0

Hope had no work-in-process inventories at either the beginning or end of 2015.

  • What would be Hope's finished goods inventory cost under the variable (direct) costing method at December 31, 2015?
  • What would Hope's operating income be under the absorption costing method?

Part C - Tool City, Inc. had 300 cordless screwdrivers on hand at January 1, 2015 costing $45 each.  Purchases and sales of cordless screwdrivers during the month of January were as follows:

Date

Purchases

Sales

January 9

 

200 @ $75

January 14

100 @ $47

 

January 23

 

75 @ $76

January 25

100 @ $48

 

January 30

 

75 @ $77

Tool City does not maintain perpetual inventory records.  According to a physical count, 150 cordless screwdrivers were on hand at January 31, 2015.

  • What is the cost of the inventory at January 31, 2015 under the FIFO method?
  • What is the cost of the inventory at January 31, 2015 under the LIFO method?
  • What is the cost of the inventory at January 31, 2015 under the FIFO method if only 145 cordless screwdrivers were on hand at the time of the physical count?

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Accounting Basics: Compute the inventory amount at december 31 2013 2014 and
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