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ADMS 4562 (10)
Lecture

4562 Assignment 1 solutions.doc

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Department
Administrative Studies
Course
ADMS 4562
Professor
Jason Fleming
Semester
Fall

Description
ADMS 4562 Fall 2011 Solutions Assignment 1 Worth: 7% (MAX 29 marks; 30 marks available) (Inventory; 14 marks available) Cost of goods sold (COGs) Purchased inventory Opening inventory $400,000 (1 mark) Plus purchases $900,000 (1 mark) Less closing inventory (see below) ($282,292) COGs $1,017,708 2 Closing inventory (specific identification) Lower of: Cost From 2010* (10 units): 10 x $400,000 / 600 = $6,667 (1 mark) From 2011 (490 units): 490 x $900,000 / 1,600 = $275,625 (1 mark) Cost $282,292 And, FMV* (i.e., net realizable value): 500 x $575 = $287,500 (1 mark) Closing inventory is $282,292 (1 mark) * Can also use LCM on opening inventory, 10 units x $575 = $5,750, and get full marks Manufactured goods inventory Opening inventory $200,000 (1 mark) Plus purchases: Parts and supplies$140,000 (1 mark) Direct labour $260,000 (1 mark) Variable overhead $33,000 (1 mark) 3 $433,000 Less closing inventory (see below) ($248,253) COGs $384,747 Closing inventory (FIFO) [Note: with FIFO, which is one method of estimating the value of ending inventory and cost of goods sold expense, the first goods in are assumed to be the first ones sold and the last goods in are assumed to be the ones remaining in ending inventory] L
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