Comparative Balance Sheets and the Income Statements for Ellis Corporation

question 197

Essay

Comparative balance sheets and the income statements for Ellis Corporation are presented below:
The following additional information is available for the year:* During the year, the company sold long-term investments for $42,300 that had been purchased for $44,800.* The company did not sell any property, plant, and equipment during the year or repurchase any of its own common stock.* All sales were on credit.* The company paid a cash dividend of $7,900.* The company paid cash to retire $16,200 of bonds payable.
Required:a. Using the indirect method, determine the net cash provided by (used in) operating activities.b. Using the direct method, determine the net cash provided by (used in) operating activities.c. Using the net cash provided by (used in) operating activities amount from either part a or b, prepare a statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.)

Understand the definition and application of the FIFO method in process costing.

Analyze how equivalent units of production are calculated under the FIFO method.

Determine the cost per equivalent unit using the FIFO method.

Compare the FIFO method to the weighted-average method in terms of cost control and cost assignment.

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Definitions:

Relevant Range

The span within which the assumptions about fixed and variable cost behaviors are valid.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Variable Costing

An accounting method that only includes variable production costs (materials, labor) in product cost, excluding fixed costs.

Mixed Cost

A cost that has both fixed and variable components, which changes with the level of output but not in direct proportion.