Assume That P Uses the Equity Method of Accounting for Its

question 84

Short Answer

Assume that P uses the equity method of accounting for its investment in S.Solve for the unknown in each of the following independent cases:
$\begin{array}{llll}&\text { CASE A } &\text { CASE B } &\text { CASE C }\\\text { P's ownership of S } & 40 \% & 25 \% & 40 \% \\\text { Investment in S--beginning of year } & \$ 100 & \$ 100 & \$ 130 \\\text { Investment in S--end of year } & \$ 120 & \$ 150 & \$ 120 \\\text { S's income (loss) } & \mathbf{A} & 300 & \mathrm{C} \\\text { S's dividends paid } & 80 & \mathbf{B} & 0\end{array}$

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Definitions:

Direct Labor Hours

The number of hours worked by employees that are directly involved in the manufacturing process.

Production Department

The section within a manufacturing company responsible for the actual production of goods.

Plantwide Factory Overhead Rates

A single overhead rate calculated by dividing total factory overhead costs by a base, applied uniformly across all products regardless of department.

Plantwide Factory Overhead Rate

A single rate used to allocate all of a factory's indirect costs to its production activities, typically based on machine hours or labor hours.