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HW_ 4 Inventory

HW_ 4 Inventory - the LCM rule is applied to classes of...

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Homework #4 : Inventory (Ch 8 and Ch 9), due on February 24. Problem 1: Caylor Inc. is considering whether or not it should change from a last-in, first-out (LIFO) to first-in, first-out (FIFO) basis of pricing inventories. The following information is available. Sales 20,000 units @ 50 Inventory, Jan 1 5,000 units @ 20 Purchase 6,000 units @ 22 10,000 units @ 25 7,000 units @ 30 Inventory, Dec 31 8,000 units @ ? Operating expense \$200,000 Required: 1) Using a periodic method, prepare a condensed income statement for the year on both bases for comparative purposes. 2) Explain whether Caylor should change from LIFO to FIFO?

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Problem 2: Harris Inc. has developed the following data for lower-of-cost-or-market valuation for its products: The normal profit margin on all trees is 20% of selling price and disposal costs are 10% of selling price. Required: 1) Determine the balance sheet inventory carrying value assuming the LCM rule is applied to individual trees. 2) Determine the balance sheet inventory carrying value assuming
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Unformatted text preview: the LCM rule is applied to classes of trees. 3) Determine the balance sheet inventory carrying value assuming the LCM rule is applied to the total inventory. Problem 3: Winchel Company uses the dollar-value LIFO method of computing inventory. An external price index is used to convert ending inventory to base year. The company began operations on January 1, 2011, with an inventory of \$150,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows: Year Ended December 31 Ending Inventory at Year-End Costs Cost Index (Relative to Base Year) 2011 \$200,000 1.08 2012 245,700 1.17 2013 235,980 1.14 2014 228,800 1.10 Required: Using Excel, calculate ending inventory for 2011, 2012, 2013, and 2014. Print a hard copy of your excel for your homework submission. FYI, you should be using Excel as a functional tool, not as a word processing device!...
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HW_ 4 Inventory - the LCM rule is applied to classes of...

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