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1. A04 Assignment 08/A 04
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A04 Assignment08
Assignment08
A04 Intermediate Accounting I
Directions:Be sure to make an electronic copy of your answer before submitting itto Ashworth College for grading.
Unless otherwise stated,answer in complete sentences,and be sure to use correct English spelling and grammar.
Sources mustbe cited in APA format. Refer to the “AssignmentFormat” page for specific formatrequirements.
Part A (30 points)
The Bravo Companymanufactures a single product.On December 31,2012 Bravo adopted the dollar-value LIFO
inventory method.The inventory on that date using the dollar-value LIFO inventory method was determined to be
$500,000.Inventory data for succeeding years are as follows:
Year Ended December 31
Inventory at Respective Year-end Prices
Relevant Price Index (Base Year 2012)
2012
$500,000
1.00
2013
527,000
1.08
2014
635,000
1.15
2015
645,000
1.21
Compute the inventory amountat December 31,2013,2014,and 2015 using the dollar-value LIFO inventory method
for each year. (Round all amounts to the nearestdollar,10 points each)
Part B (40 points)
Information from Hope Company’s records for the year ended December 31,2015 is available as follows:
Net sales
$2,800,000
Costof goods manufactured:
Variable
$1,260,000
Fixed
$630,000
Operating expenses:
Variable
$196,000

2. Fixed
$240,000
Units manufactured
70,000
Units sold
60,000
Finished goods inventory,1/1/2015
$0
Hope had no work-in-process inventories ateither the beginning or end of 2015.
a. What would be Hope’s finished goods inventorycostunder the variable (direct) costing method atDecember 31,
2015? (20 points)
b. What would Hope’s operating income be under the absorption costing method? (20 points)
Part C (30 points,10 each)
Tool City, Inc. had 300 cordless screwdrivers on hand atJanuary 1, 2015 costing $45 each.Purchases and sales of
cordless screwdrivers during the month of January were as follows:
Date
Purchases
Sales
January 9
200 @ $75
January 14
100 @ $47
January 23
75 @ $76
January 25
100 @ $48
January 30
75 @ $77
Tool City does notmaintain perpetual inventoryrecords.According to a physical count, 150 cordless screwdrivers
were on hand at January 31, 2015.
a. What is the costof the inventory at January 31, 2015 under the FIFO method?
b. What is the costof the inventory at January 31, 2015 under the LIFO method?
c. What is the costof the inventory at January 31, 2015 under the FIFO method if only 145 cordless screwdrivers
were on hand at the time of the physical count?