{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

UNICAP_rules_solution

# UNICAP_rules_solution - Required Compute YAZ’s...

This preview shows pages 1–2. Sign up to view the full content.

Solution : Inventory costing under the UNICAP rules 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 (a period cost) 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 costs) and the direct costs associated with ending inventory equal \$40,800.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 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% Sec 263A costs 151,500 Indirect costs allocated to ending inventory Total indirect costs beginning inventory +current period 5,000 151,500 156,500 Allocation percentage (ratio of direct costs) Direct costs in ending inventory 40,800 340,000 Direct costs in beginning inventory + direct costs in current period (30,000 + 310,000) x 12% Ending inventory of indirect costs 18,780 Cost of good sold for YAZ is computed: Beginning inventory (30,000 direct + 5,000 indirect) 35,000 Direct costs 310,000 Section 263A costs 151,500 Cost of good available 496,500 Ending inventory (40,800 direct + 18,780 indirect) (59,580) Cost of good sold 436,920...
View Full Document