Question B3 (Week 5: Inventory Costing / 20 marks)

Consider the following:

Beginning inventory: 800 units @ $24 per unit.

Quarter 1: 1200 units purchased, @$25 per unit.

Quarter 2: 900 units purchased, @$30 per unit.

Quarter 3: 1500 units purchased, @$29 per unit.

Quarter 4: 1200 units purchased, @$32 per unit.

3,800 units sold over these 4 quarters for an average price of $40 per unit.

Corporate tax rate is 16.5%.

Required:

1. What are the values of (1) beginning inventory, (2) purchase, (3) COGS, (4) ending inventory, (5) sales under the FIFO method, for this 4-quarter period?

2. What are the values of (1) average cost, (2) COGS, (3) ending inventory, (4) earnings before tax and (5) earnings, under the average cost method, for this 4-quarter period?

Question B4 (Week 4: The Concept of Depreciation / 20 marks)

A company has just purchased a machine for $30,000,000. The machine is expected to last for 5 years with a salvage value of $5,000,000.

Required:

1. What would be the annual values of (i) depreciation rate, (ii) depreciation expense, (iii) accumulated depreciation and (iv) net book value over the 5-year period, under the straight line depreciation method?

2. What would be the annual values of (i) depreciation rate, (ii) depreciation expense, (iii) accumulated depreciation and (iv) net book value over the 5-year period, under the double-declining balance depreciation method?