Answer:
(A) Inventory increases by 595,000
(B) Inventory decreases by 14,500
(C) no effect
Inventory balance: 595,000 - 14,500 = 580,500
Explanation:
<u>We are asked for Readers' Corner</u>
(A) Reades purchase at 595,000 so we use this value. Reader has no informaiton about the cost of New Books.
(B) there is an allowance for 14,500 the inventory account will decrease immediately as it works with perpetual invnetory method
(C) no effect. The payment do not alter the invnetory valuation.
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Explanation:không bít dòi
Answer:
D) Johnson has failed to use the correct cost driver as the cost-allocation base for setup costs.
Explanation:
One of the main disadvantages of ABC costing method is that it is very hard and expensive to implement, and sometimes you cannot allocate all overhead costs to specific cost drivers. That is what happened here with Johnson's costing method, they combined two cost drivers and allocated resources using the number customer orders which is not a valid base, e.g. one single large order represents higher costs than 10 small orders.
ABC costing is not accepted by US GAAP due to its limitations or how hard it is to apply correctly, but it is a very useful information source for making decisions. The problem is, if gathering the information is worth the effort and extra cost of ABC?
Answer:
$370,000
Explanation:
The computation of the reproduction cost of the building is shown below:
= Market value of the subject property + accrued depreciation - the added value of the site
= $400,000 + $50,000 - $80,000
= $370,000
We simply added the accrued depreciation expense and deducted the added value of the site from the market value of the subjected property so that the accurate value can come.
