Is this correct? How do I do this?!

BE6-5 In its first month of operation, Hoffman Company purchased 100 units of inventory for $6, then 200 units for $7, and final

QveST [7]

Answer:

Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO.

If the company used FIFO instead of LIFO, their profits would increase by $1,960 - $1,720 = $240 because their COGS would be lower.

Explain why this amount is referred to as phantom profit.

Phantom profit basically refers to the profit that the company could have made using a different accounting method.

Identify the impact of LIFO versus FIFO.

LIFO increases COGS by $240, reducing gross profits by the same amount.

Explanation:

units price total

purchase 100 $6 $600

purchase 200 $7 $1,400

purchase 140 $8 $1,120

total 440 $3,120

ending inventory 180

using LIFO $1,160

using FIFO $1,400

COGS using LIFO = $3,120 - $1,160 = $1,960

COGS using FIFO = $3,120 - $1,400 = $1,720

If the company used FIFO instead of LIFO, their profits would increase by $1,960 - $1,720 = $240 because their COGS would be lower.

6 0

3 years ago

Roeher Company sold $9,000 of its specialty shelving to Elkins Office Supply Co. on account. Prepare the entries when (a) Roeher

emmainna [20.7K]

Answer:

1. Dr Accounts Receivable 9,000

Cr Sales Revenue 9,000

2. Dr Allowance for sales returns and allowances 700

Cr Accounts Receivable 700

3. Dr Allowance for sales returns and allowances 200

Cr Accounts Receivable 200

Explanation:

Preparation of the journal entry

1. Preparation of the entries when Roeher makes the sale

Dr Accounts Receivable 9,000

Cr Sales Revenue 9,000

2. Preparation of the entries when Roeher grants an allowance of the amount of $700

Dr Allowance for sales returns and allowances 700

Cr Accounts Receivable 700

3. Preparation of the entries when Roeher estimated that an additional amount of $200 in allowances will be granted to Elkins

Dr Allowance for sales returns and allowances 200

Cr Accounts Receivable 200

5 0

3 years ago

Katie dough is a successful dentist and a wonderful pastry chef. she earns $800 a day on average in her dental practice. her fri

GaryK [48]

Answer:

No

Explanation:

Katie's opportunity cost is too high. She is giving up more money at the dental practice than the $100 she would be saving by making the pastries from hand instead of ordering them from the caterer. The group should continue to order the pastries and split the cost among all the friends so each person's share is lower.

3 0

3 years ago

Rishabh a brilliant student lives in a remote district of Orissa and has done mechanical engineering, He has won a lottery of Rs

shtirl [24]

Answer:

hall

Explanation:

kk off Krishan Kala

5 0

3 years ago

Flapjack Corporation had 7,800 actual direct labor hours at an actual rate of $12.44 per hour. Original production had been budg

likoan [24]

Answer:

Direct labor efficiency variance= $9,360 unfavorable

It is unfavorable because it took longer to produce 975 units than the standard time estimated.

Explanation:

Giving the following information:

Standard direct labor hour per unit= 7.2 hours

Standard rate= $13

Actual units= 975

Actual hours= 7,800

Actual rate= $12.44

<u>The direct labor time variance is also known as the direct labor efficiency variance. It calculates the effect on costs of the time required to produce the actual amount of units.</u>

We need to use the following formula:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Standard quantity= 975 units*7.20= 7,020 hours

Direct labor efficiency variance= (7,020 - 7,800)*12= $9,360 unfavorable

It is unfavorable because it took longer to produce 975 units than the standard time estimated.

4 0

3 years ago