Bravo Manufacturing Company began operations on January 1, 2016. Depreciation fo
ID: 2789187 • Letter: B
Question
Bravo Manufacturing Company began operations on January 1, 2016. Depreciation for the year amounted to $200,000: 30% relates to sales, 20% relates to administrative facilities, and 50% to the factory. Of the total units produced during FY 2016: 75% were sold in 2016 & 25% were in the finished good inventory. Use this information to determine the dollar amount of the total depreciation that will be in the: (Round dollar values & enter as whole dollars only.)
1. FY 2016 Product Costs
2. FY 2016 Period Costs
3. FY 2016 Cost of Goods Sold
4. FY 2016 Balance Sheet
Explanation / Answer
1. FY 2016 Product Costs - Product Costs are directly associated with product sold and in this case deprectiaiton pertaining to sales is 30%.
I.e $ 640,000. Out of this only 75% sales is happening in 1st year so this shall amounts to $ 45,000.
2. FY 2016 Period Costs - Relates to the costs incurred in the entire period of year irrespective of sales + to the extent of Sales. Hence Period costs shall be 70% of 200,000$ = $ 140,000 + 45,000 = $ 185,000.
3.FY 2016 COGS = Here 75% of goods are sold. Hence total depreciation that can be accounted is 75%*200,000$ =$150,000.
4. FY 2016 Balance Sheet - Fixed assets like office building, factory and equipment from a part of balance sheet item and if they are treated and if accounted wrt sales then, Balance sheet deprectiaiton = $ 200,000 * 70% * 75% = $ 105,000.