Company XYZ manufactures a tangible product and sells the product at wholesale. In its first year of operations, XYZ manufactured 1,000 units of product and incurred $200,000 direct material cost and $130,000 direct labor costs. For financial statement purposes, XYZ capitalized $85,000 indirect costs to inventory. For tax purposes, it had to capitalize $116,000 indirect costs to inventory under the UNICAP rules. At the end of its first year, XYZ held 260 units in inventory. Required: Compute XYZ's cost of goods sold for book purposes and for tax purposes. Cost of goods sold for book purposes Cost of goods sold for tax purposes Amount

Company XYZ manufactures a tangible product and sells the product at wholesale. In its first year of operations, XYZ manufactured 1,000 units of product and incurred $200,000 direct material cost and $130,000 direct labor costs. For financial statement purposes, XYZ capitalized $85,000 indirect costs to inventory. For tax purposes, it had to capitalize $116,000 indirect costs to inventory under the UNICAP rules. At the end of its first year, XYZ held 260 units in inventory. Required: Compute XYZ's cost of goods sold for book purposes and for tax purposes. Cost of goods sold for book purposes Cost of goods sold for tax purposes Amount

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter5: Introduction To Business Expenses

Section: Chapter Questions

Problem 63P

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Company XYZ manufactures a tangible product and sells the product at wholesale. In its first year of operations, XYZ manufactured 1,900 units of product and incurred $351,500 direct material cost and $194,750 direct labor costs. For financial statement purposes, XYZ capitalized $149,750 indirect costs to inventory. For tax purposes, it had to capitalize $180,750 indirect costs to inventory under the UNICAP rules. At the end of its first year, XYZ held 190 units in inventory. In its second year of operations, XYZ manufactured 3,800 units of product and incurred $722,000 direct material cost and $418,000 direct labor costs. For financial statement purposes, XYZ capitalized $282,000 indirect costs to inventory. For tax purposes, it had to capitalize $336,000 indirect costs to inventory under the UNICAP rules. At the end of its second year, XYZ held 380 items in inventory. Required: a. Compute XYZ's cost of goods sold for book purposes and for tax purposes for second year assuming that XYZ…
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