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about the March issue’s “The Tax Benefits of ABC” and “Where to Find Help Online.”

Please note: This item is from our archives and was published in 1997. It is provided for historical reference. The content may be out of date and links may no longer function.

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Clarifications

The following items clarify two articles in the March 1997 issue of the Journal:

  • Some readers have asked how the cost of goods sold figure was determined in exhibit 3 of “The Tax Benefits of ABC” (page 36). As noted on page 35, Hi-V has a 10% beginning inventory. Thus, the year 1 ABC cost of goods sold amount has two components: (1) the portion of sales that comes from the beginning inventory valued at the plantwide cost-1,200 units of Hi-V at $88-and (2) the portion of sales that comes from the current year’s production valued at the ABC unit costs-10,800 units of Hi-V @ $69.49 and 6,000 units of Lo-V @ $69.01. See the computation below:

    ABC Cost of Goods Sold Computation-Year 1
    From beginning inventory (@ plantwide rates):

    Hi-V: (10% x 12,000) x $88 $105,600  
    Lo-V: 0 x $32 ______ $ 105,600

    From production (@ ABC rates):

    Hi-V: (90% x 12,000) x $69.49 750,492  
    Lo-V: @ 6,000 x $69.01 414,060 1,164,552
    Cost of goods sold   $1,270,152
  • The Web address for the Accounting News Network given in “Where to Find Help Online” (page 45) is now http://www.microsoft.com/smallbiz . In addition, the Electronic Accountant Newswire, identified as its own Web site (on page 48), is but a small part of the Electronic Accountant Web site. The latter, which has many features besides Newswire (for example, Web Links, Buyers Guide and discussion groups), can be reached directly at http://www.electronicaccountant.com .