Bravo Manufacturing Company began operations on January 1, 2016. Depreciation fo

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.

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