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Eva8 [605]
3 years ago
11

Weighted Average Cost Flow Method Under Perpetual Inventory System The following units of a particular item were available for s

ale during the calendar year:
Jan. 1 Inventory 10,000 units at $75.00
Mar. 18 Sale 8,000 units
May 2 Purchase 18,000 units at $77.50
Aug. 9 Sale 15,000 units
Oct. 20 Purchase 7,000 units at $80.25
The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places, if necessary.
Business
1 answer:
zmey [24]3 years ago
3 0

Answer:

Please see attached solution

Explanation:

a. Cost of goods sold . Detailed explanation attached.

b. Ending inventory. Detailed explanation attached.

Note 1.

Weighted average cost per unit on January 20

= $1,545,000/20,000 units

= $77.5

Note 2

Weighted average cost per unit on January 30

= $948,000/12,000 units

= $79.00

You might be interested in
Suppose that a new technology, nuclear fusion, makes it much cheaper to generate power. Would this development cause a shift in
Marrrta [24]

Answer:

Both curves shifts rightwards.

Explanation:

When there is an improvement in the technological process then this will to increase the production level of the goods. Technological advancement increases the potential of an economy which in turn increases the supply of goods at the same price level. Improvement in the technological process increases the economy's productivity.

This will shift the short run aggregate supply curve and long run aggregate supply curve rightwards.

3 0
2 years ago
ZigZag Cola produces a​ lemon-lime soda. The production process starts with workers mixing the lemon syrup and lime flavors in a
Whitepunk [10]

Answer:

Zig Zag Cola

1. Classification of costs according to their category in the value chain:

a. Inbound logistics (relationship with suppliers):

New recipe                                       $ 1,300

Lime flavoring                                   $ 1,180

Bottles                                              $ 1,040

Salt                                                        $ 50

Lemon syrup                                 $ 16,000

Freight-in on materials                  $ 2,000

Total cost of Inbound logistics = $21,500

b. Operations:

Wages of workers who mix syrup     $ 7,800

Plant janitors' wages                             $ 900

Plant utilities                                          $ 650

Rearranging plant layout                    $ 1,600

Depreciation on plant & equipment $ 2,700

Total cost of Operations =               $13,650

c. Outbound logistics:

Delivery truck drivers' wages     $ 275

Depreciation on delivery trucks  $ 175

Total outbound logistics cost     $450

d. Marketing and sales:

Customer hotline                           $ 180

Sales commissions                       $ 325

Sales coupons for customers      $ 770

Total marketing and sales cost $1,275

e. Service:

Customer hotline                         $ 180

Sales coupons for customers     $ 770

Product Replacement                   $ 70

Total costs of Services            $1,020

2. Subcategories of Production Costs:

Direct Materials:

New recipe        $ 1,300

Lime flavoring    $ 1,180

Bottles               $ 1,040

Salt                         $ 50

Lemon syrup  $ 16,000

Freight-in

on materials   $ 2,000

Cost of materials $21,500

Direct Labor:

Wages of workers who mix syrup $ 7,800

Total cost of direct labor                $ 7,800

Manufacturing Overheads:

Plant janitors' wages                             $ 900

Plant utilities                                          $ 650

Rearranging plant layout                    $ 1,600

Depreciation on plant & equipment  $ 2,700

Total Overheads                                  $ 5,85

Explanation:

a) Data and Calculations:

Costs incurred (in thousands)

Direct Materials:

New recipe        $ 1,300

Lime flavoring    $ 1,180

Bottles               $ 1,040

Salt                         $ 50

Lemon syrup  $ 16,000

Freight-in

on materials   $ 2,000

Cost of materials $21,500

Direct Labor:

Wages of workers who mix syrup $ 7,800

Total cost of direct labor                $ 7,800

Manufacturing Overheads:

Plant janitors' wages                             $ 900

Plant utilities                                          $ 650

Rearranging plant layout                    $ 1,600

Depreciation on plant & equipment $ 2,700

Overheads                                         $ 5,850

Selling and Distribution Expenses:

Depreciation on delivery trucks  $ 175

Delivery truck drivers' wages     $ 275

Sales commissions                      $ 325

Customer hotline                         $ 180

Sales coupons for customers     $ 770

Product Replacement                   $ 70

Selling and Distribution costs   $1,795

b) ZigZag's value chain activities, according to Michael Porter, include inbound logistics, operations, outbound logistics, marketing and sales, and service. These activities create value that exceeds their cost for the purpose of generating a higher profit.  In a similar way, ZigZag's production costs can be categorized into direct materials, direct labor, and manufacturing overhead.

3 0
3 years ago
Big Time Widgets has the following inventory data: December 1 Beginning inventory of 15 units at $6.00 per unit December 7 Purch
kolbaska11 [484]

Answer:

Cost of goods sold on a LIFO basis for December = $409.50

If periodic inventory system is followed then, there is no proper weekly record, proper record is missing and therefore, average method is followed, in that case usage of LIFO or FIFO is not suggested.

Explanation:

As per LIFO method, we have Last In First Out which means the item which is last added in inventory will be sold first.

In the given instance we have things as following:

1 December       opening      15 units         $6.00 per unit           $90.00

7 December      purchased   50 units       $6.60 per unit           $330.00

12 December     Sales           45 units        $6.60 per unit           $297.00

Balance after sales

15 units @ $6.00 per unit = $90.00

5 units @ $6.60 per unit = $33.00

20 December    Purchased  30 units      $7.50 per unit              $225

29 December    Sales          15 units        $7.50 per unit              $112.5

Balance

15 units @ $6.00 per unit = $90.00

5 units @ $6.60 per unit = $33.00

15 units @ $7.50 per unit = $112.50

As stated above, under LIFO we have Last In First Out

Cost of goods sold

12 December     Sales           45 units        $6.60 per unit           $297.00

29 December    Sales           15 units        $7.50 per unit              $112.5

Total cost of goods sold in December = $297 + $112.5 = $409.5

In case periodic inventory system had been used then,

no proper record is maintained, for cost at which the goods are acquired, and therefore average method is followed, since no proper cost record is maintained.

Final Answer

Cost of goods sold on a LIFO basis for December = $409.50

If periodic inventory system is followed then, there is no proper weekly record, proper record is missing and therefore, average method is followed, in that case usage of LIFO or FIFO is not suggested.

8 0
2 years ago
A watch manufacturer incurs a variable cost of $10 per watch and fixed costs of $400,000. To earn a 25 percent markup on selling
WITCHER [35]

Answer:

$22.50 per unit

Explanation:

Mark -up is the percentage of cost that is earned as profit.

Using mark-up,

Selling price = Total cost + total profit

Total cot = Fixed cost + variable cost

Total costs = $400,000 +  (10× 50,000)

                   = $900,000

Sales revenue = 125%× 900,000

                       = 1,125,000

Selling price per unit = Sales revenue/units

                       =1,125,000/50,000

                     = $22.50 per unit

6 0
3 years ago
Read 2 more answers
he director of capital budgeting for See-Saw Inc., manufacturers of playground equipment, is considering a plan to expand produc
kicyunya [14]

Answer and Explanation:

The computation is shown below:

Debt = D ÷ (E + D)

= 0.8 ÷ (1 + 0.8)

= 0.4444

Now

Weight of equity = 1 - Debt

= 1 - 0.4444

= 0.5556

As per Dividend discount model

Price = Dividend in 1 year ÷ (cost of equity - growth rate)

40 = $2 ÷ (Cost of equity - 0.06)

Cost of equity = 11%

Cost of debt

K = N

Let us assume the par value be $1,000

Bond Price =∑ [(Annual Coupon) ÷ (1 + YTM)^k] + Par value ÷ (1 + YTM)^N

k=1

K =25

$804 =∑ [(7 × $1000 ÷ 100)/(1 + YTM ÷ 100)^k] + $1000 ÷ (1 + YTM ÷ 100)^25

k=1

YTM = 9

After tax cost of debt = cost of debt × (1 - tax rate)

= 9 × (1 - 0.21)

= 7.11

WACC = after tax cost of debt × W(D) + cost of equity ×W(E)

= 7.11 × 0.4444 + 11 × 0.5556

= 9.27%

As we can see that the WACC is lower than the return so it should be undertake the expansion

5 0
2 years ago
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