UNICAP_rules_solution - costs) and the direct costs...

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Inventory costing under the UNICAP rules – Solution The YAZ Corporation is a manufacturer. Assembly line employees and their supervisors worked 30,000 hours during the year. Administrative personnel worked a total of 10,000 hours. YAZ uses a percentage of direct labor hours to total labor hours to allocate indirect costs to inventory. YAZ incurred the following direct costs during the year: Cost Amount Materials 50,000 Direct labor + payroll taxes 240,000 Depreciation of assembly line equipment 20,000 Total direct costs 310,000 YAZ incurred the following indirect operating costs during the year: Cost Amount Advertising 30,000 Administrative wages + payroll taxes 150,000 Depreciation of office equipment 1,000 Rent 30,000 Utilities 6,000 Miscellaneous 15,000 Total indirect costs 232,000 Assume that beginning inventory was $35,000 ($30,000 direct costs + $5,000 indirect
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Unformatted text preview: costs) and the direct costs associated with ending inventory equals $40,800. Required: Compute YAZ’s inventoried costs and cost of goods sold for the year. YAZ’s 263A costs for the year Indirect costs (less advertising $30,000) 202,000 Allocation rate (burden rate based on direct hours) Assembly line hours 30,000 Total hours 40,000 x 75% 151,500 Indirect costs allocated to ending inventory Total indirect costs (5,000 + 151,500) (beginning inventory + current period) 156,500 Allocation percentage (ratio of direct costs) Direct costs in ending inventory Direct costs in beginning inventory + direct costs in current period (30,000 + 310,000) 40,800 340,000 x 12% 18,780 Cost of good sold for YAZ is computed: Beginning inventory (30,000 + 5,000) 35,000 Direct costs 310,000 Section 263A costs 151,500 Ending inventory (40,800 + 18,780) (59,580) Cost of good sold 436,920...
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This note was uploaded on 03/04/2010 for the course TAX 6845 taught by Professor Kelliher,c during the Fall '08 term at University of Central Florida.

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UNICAP_rules_solution - costs) and the direct costs...

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