Ch18 Full Test Bank Inventory and Overhead - Business Math Procedures 13e Test Bank with Answers by Jeffrey Slater. DOCX document preview.
Practical Business Math Procedures, 13e (Slater)
Chapter 18 Inventory and Overhead
1) A perpetual inventory system continually updates inventory records.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
2) A periodic inventory system requires a physical count of its inventory once a month.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
3) Inventory value means the flow of costs does not always match the flow of goods.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
4) In the specific identification method, the flow of goods and the flow of costs are not the same.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
5) The specific identification method is able to identify in the ending inventory the actual invoice cost associated with it.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
6) The specific identification method might be used by companies with high-cost items.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
7) In the specific identification method, the total cost of ending inventory is equal to the number of units not sold times the actual cost per unit.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
8) Cost of goods sold equals cost of goods available for sale plus cost of ending inventory.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
9) Companies with homogeneous products might use the weighted-average method.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
10) Weighted-average unit cost is total cost of goods available for sale divided by beginning number of units available for sale.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
11) In FIFO, the most recent cost is assigned to the inventory sold.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
12) The gross profit method is a way to estimate the cost of ending inventory without a physical count.
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (2) Calculate the estimated inventory using the gross profit method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
13) The cost flow tends to follow the physical flow when FIFO is used.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
14) During inflation, LIFO produces the highest possible income for a company.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
15) LIFO doesn't always match the physical flow of goods but still can be used to calculate the flow of costs.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
16) A company can change from LIFO to FIFO without notifying the Internal Revenue Service.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
17) Under certain circumstances, ending inventory could be valued at less than cost.
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
18) To use the retail method of estimating ending inventory, the figure for net sales at retail must be known.
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
19) A cost ratio of $0.68 means that for each $1 of retail inventory it costs the store $0.68.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
20) The cost ratio times ending inventory at cost equals ending inventory at retail.
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
21) Inventory turnover at cost is net sales divided by average inventory at retail.
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
22) Overhead expense can be allocated to particular departments.
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
23) Perpetual inventory does not have this characteristic:
A) Made easier by the increased use of computers
B) Verified at some point by a physical count
C) Usually used by small stores
D) Utilizes scanners, computers, etc.
E) None of these
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
24) In specific identification, which one is not true?
A) The specific purchase invoice prices are used
B) Flow of goods and flow of cost are the same
C) Ending inventory is associated with specific purchase prices
D) Low-cost items are often used in this method
E) None of these
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
25) Cost of goods sold is equal to cost of goods available for sale:
A) Plus cost of ending inventory
B) Minus cost of ending inventory
C) Divided by cost of ending inventory
D) Multiplied by cost of ending inventory
E) None of these
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (2) Calculate the estimated inventory using the gross profit method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
26) The weighted-average method is best used:
A) For heterogeneous product
B) For homogeneous products
C) Only for grains
D) Only for fuels
E) None of these
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
27) FIFO assumes all but one of the following:
A) Sell the old inventory first
B) Recent cost assigned to inventory not sold
C) Sell the new inventory first
D) Cost flow tends to follow physical flow
E) None of these
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
28) During inflation, the best method to use in inventory valuation that produces the smallest amount of profit is:
A) LIFO
B) FIFO
C) Specific invoice
D) Weighted average
E) None of these
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
29) All but which one of the following is information needed to calculate inventory valuation by the retail method?
A) Cost of goods available for sale at retail
B) Cost of goods available for sale at cost
C) Gross sales
D) Net sales
E) None of these
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
30) The retail method:
A) Is an estimate
B) Requires a cost ratio
C) Is used by many companies
D) Aids a company in not having to calculate an inventory cost for each individual item
E) All of these
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
31) In the retail method the ending inventory at cost is calculated by multiplying the cost ratio times:
A) Beginning inventory at retail
B) Ending inventory at retail
C) Cost of goods available for sale
D) Net sales for the month
E) None of these
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
32) The cost ratio in the retail method is found by the cost of goods available for sale at cost divided by:
A) Net sales
B) Ending inventory at retail
C) Cost of goods available for sale at retail
D) Net purchases at cost
E) None of these
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
33) Inventory turnover at retail is equal to net sales divided by:
A) Beginning inventory at retail
B) Average inventory at retail
C) Beginning inventory at cost
D) Average inventory at cost
E) None of these
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
34) Compared with inventory turnover at cost, inventory turnover at retail is usually:
A) Higher
B) Much higher
C) Lower
D) Much lower
E) None of these
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
35) With net sales of $40,000, beginning inventory at retail of $14,000, ending inventory at retail of $20,000, and cost of goods sold of $19,500, the inventory turnover at retail is (to the nearest hundredth):
A) 5.15
B) 3.25
C) 2.35
D) 5.23
E) None of these
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
36) With beginning inventory at cost of $9,000, ending inventory at cost of $7,000, net sales of $51,000, and cost of goods sold of $46,000, the inventory turnover at cost to the nearest hundredth is:
A) 5.75
B) 7.55
C) 5.57
D) 7.57
E) None of these
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
37) Overhead expenses are:
A) Directly related to a specific department
B) Directly related to a specific product
C) Contributing directly to the running of a business
D) Contributing indirectly to the running of a business
E) None of these
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
38) Overhead expenses are allocated to particular departments:
A) Strictly on floor space
B) Strictly on sales volume
C) Based on a ratio of space to sales volume
D) By floor space or sales volume
E) None of these
Difficulty: 1 Easy
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
39) Given: Department A. 8,000 sq. ft., Department B. 5,000 sq. ft., and Department C. 6,000 sq. ft. The percent of overhead expense applied to Department C to the nearest whole percent will be:
A) 68%
B) 32%
C) 26%
D) 42%
E) None of these
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
40) With Department A. Sales of $200,000, Department B. Sales of $600,000, and overhead expense to be allocated of $25,000, the distribution of overhead to Department A. based on sales is:
A) $18,750
B) $25,000
C) $2,600
D) $6,250
E) None of these
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
41) Belle Co. has beginning inventory of 12 sets of paints at a cost of $1.50 each. During the year, the store purchased 7 at $3.00, 8 at $3.25, and 12 at $3.50. By the end of the year 31 sets were sold. Using the LIFO method, the cost of ending inventory is:
A) $28.00
B) $12.00
C) $21.00
D) $3.50
E) None of these
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
42) Given the following:
FIFO method: 16 units left in inventory
Jan 1 | Beginning Inventory | 9 units at $105 = $945 |
April 13 | Purchased | 14 units at $120 = $1,680 |
Sept 17 | Purchased | 20 units at $130 = $2,600 |
Dec 10 | Purchased | 14 units at $140 = $1,960 |
The cost of goods sold is:
A) $5,000
B) $10,000
C) $4,965
D) $5,225
E) None of these
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
43) Jones Co. uses the retail inventory method. Given the following data, what is the ending inventory at cost? Sales at retail $80,000, net purchases at cost $41,200, net purchases at retail $66,800, beginning inventory at cost $22,400, beginning inventory at retail $36,800. Round cost ratio to the nearest whole percent.
A) $23,600
B) $63,600
C) $14,936
D) $14,396
E) None of these
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
44) Given the following: LIFO method 250 units left in inventory
Beginning inventory | 200 units at $6 | $1,200 |
Purchases: | ||
Apr 10 | 400 units at $7 | $2,800 |
May 15 | 250 units at $7 | $1,600 |
July 9 | 200 units at $8 | $1,600 |
Oct 8 | 100 units at $11 | $1,100 |
The cost of ending inventory is:
A) $1,550
B) $2,300
C) $1,200
D) $3,200
E) None of these
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
45) Joy Co. allocates overhead expenses to all departments on the basis of floor space (sq. ft.) occupied by each department. This year total overhead expenses were $22,000. Department A. occupied 15,000 sq. ft., Department B. 18,000 sq. ft., and Department C. 9,000 sq. ft. The amount of overhead allocated to Department B is (round to the nearest dollar):
A) $1,800
B) $9,429
C) $9,900
D) $39,600
E) None of these
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
46) Allison Co. has a beginning inventory costing $90,000 and an ending inventory costing $120,000. Sales were $380,000. Assume Allison's markup rate (markup is based on selling price) is 40%. Based on the selling price, the inventory turnover at cost (to the nearest hundredth) is:
A) 2.17
B) 2.22
C) 1.47
D) 1.58
E) None of these
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
47) Johnson Co. uses the retail inventory method. From the following data what is the estimated ending inventory at cost? Net purchases at cost $33,000, beginning inventory at cost $27,000, beginning inventory at retail $35,000, net purchases at retail $45,000, retail sales $70,000.
A) $7,500
B) $30,000
C) $22,500
D) $12,500
E) None of these
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
48) Stone Company uses the LIFO method. At the end of the period there are 22 units left in inventory. Given the following, the cost of ending inventory is:
January | 20 units at $70 | $1,400 |
March | 36 units at $65 | $2,340 |
July | 40 units at $80 | $3,200 |
A) $1,400
B) $3,200
C) $1,530
D) $3,150
E) None of these
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
49) Moss Co. uses the FIFO method to calculate ending inventory. Assuming 300 units are not sold, the cost of goods sold is:
January 1 Inventory | 200 units at $9 | $1,800 |
Feb 15 Purchase | 300 units at $10 | $3,000 |
Aug 20 Purchase | 400 units at $11 | $4,400 |
Dec 20 Purchase | 100 units at $12 | $1,200 |
A) $7,600
B) $7,280
C) $3,120
D) $3,400
E) None of these
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
50) Melissa's Dress Shop's inventory at cost on January 1 was $19,400. Its retail value was $36,000. During the year, additional net purchases at a cost of $42,600 were brought in. Its retail value was $64,000. The net sales for the year were $70,000. Melissa's inventory at cost by the retail method is:
A) $30,000
B) $18,600
C) $18,000
D) $12,400
E) None of these
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
51) Mac's Hardware's gross profit on sales is 40%. At the beginning of January, cost of inventory was $18,000. During one month, Mac had net purchases of $42,000. Net sales at retail for the month were $49,000. The estimated cost of ending inventory using the gross profit method is:
A) $30,600
B) $29,400
C) $60,000
D) $42,000
E) None of these
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (2) Calculate the estimated inventory using the gross profit method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
52) Crestwood Paint Supply had a beginning inventory of 10 cans of paint at $25.00 per can. They purchased 20 cans during the month at $30.00 per can. They had an ending inventory valued at $500. How much paint in dollars was used for the month?
A) $250
B) $850
C) $350
D) $1,350
E) None of these
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
53) Finney's MMA Gym had a total of $1,300 worth of boxing gloves on June 1. The ending inventory for the month was $524. What was the cost of goods sold for June?
A) $524
B) $1,352
C) $1,824
D) $776
E) None of these
Difficulty: 2 Medium
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
54) Bauer Supply had total cost of goods sold of $1,400 with 140 units available for sales. What was the average cost per unit?
A) $10
B) $14
C) $140
D) $14.10
E) None of these
Difficulty: 2 Medium
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
55) Assume Staley's had net sales of $72,000 per day, beginning inventory of $22,000, and ending inventory at retail of $18,900. What was the inventory turnover at retail?
A) 3.57
B) 3.5
C) 5.5
D) 3.0
E) None of these
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
56) Clay's Fishing Shop's beginning inventory is $70,000 and ending inventory is $36,500. What was Clay's average inventory?
A) $53,250
B) $48,000
C) $35,000
D) $18,250
E) None of these
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory-Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
Match the following terms with their definitions.
A) Average cost for that period for inventory
B) Inventory continually updated
C) (Beginning inventory and ending inventory) ÷ 2
D) New inventory sold first
E) Cost percentage
F) Inventory not updated continually
G) Each cost is known
H) Old inventory sold first
I) A ratio
J) A ratio used to calculate cost of ending inventory
K) Operating expenses not directly associated with a specific department
57) Average inventory
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO; LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.; 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.; 18-02 (2) Calculate the estimated inventory using the gross profit method.; 18-02 (3) Explain and calculate inventory turnover.; 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
58) FIFO
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO; LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.; 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.; 18-02 (2) Calculate the estimated inventory using the gross profit method.; 18-02 (3) Explain and calculate inventory turnover.; 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
59) Inventory turnover
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO; LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.; 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.; 18-02 (2) Calculate the estimated inventory using the gross profit method.; 18-02 (3) Explain and calculate inventory turnover.; 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
60) LIFO
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO; LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.; 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.; 18-02 (2) Calculate the estimated inventory using the gross profit method.; 18-02 (3) Explain and calculate inventory turnover.; 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
61) Retail method
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO; LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.; 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.; 18-02 (2) Calculate the estimated inventory using the gross profit method.; 18-02 (3) Explain and calculate inventory turnover.; 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
62) Weighted average
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO; LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.; 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.; 18-02 (2) Calculate the estimated inventory using the gross profit method.; 18-02 (3) Explain and calculate inventory turnover.; 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
63) Periodic
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO; LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.; 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.; 18-02 (2) Calculate the estimated inventory using the gross profit method.; 18-02 (3) Explain and calculate inventory turnover.; 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
64) Overhead expense
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO; LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.; 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.; 18-02 (2) Calculate the estimated inventory using the gross profit method.; 18-02 (3) Explain and calculate inventory turnover.; 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
65) Gross profit method
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO; LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.; 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.; 18-02 (2) Calculate the estimated inventory using the gross profit method.; 18-02 (3) Explain and calculate inventory turnover.; 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
66) Specific identification
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO; LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.; 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.; 18-02 (2) Calculate the estimated inventory using the gross profit method.; 18-02 (3) Explain and calculate inventory turnover.; 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
67) Perpetual
Difficulty: 1 Easy
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO; LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.; 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.; 18-02 (2) Calculate the estimated inventory using the gross profit method.; 18-02 (3) Explain and calculate inventory turnover.; 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
Answers: 57) C 58) H 59) I 60) D 61) J 62) A 63) F 64) K 65) E 66) G 67) B
68) Complete the table, given 21 units are sold:
Beg. Inventory | Units | Unit Cost | Dollar Cost | |
Jan 1 | 8 | $6.00 | A | |
Apr 11 | 24 | $11.00 | B | |
May 17 | 30 | $14.00 | C | |
Dec 5 | 19 | $16.00 | D |
A. 8 × $6 = $48; B. 24 × $11 = $264; C. 30 × $14 = $420; D. 19 × $16 = $304.
Difficulty: 2 Medium
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
69) Given the following, with 21 units remaining:
Beg. Inventory | Units | Unit Cost | |
Jan 1 | 8 | $6.00 | |
Apr 11 | 24 | $11.00 | |
May 17 | 30 | $14.00 | |
Dec 5 | 19 | $16.00 |
Calculate:
LIFO | FIFO | Weighted-Average | |
Cost of Ending Inventory | A | C | E |
Cost of Goods Sold | B | D | F |
A. (8 × $6) + (13 × $11) = $191;
B. (8 × $6 + 24 × $11 + 30 × $14 + 19 × $16) - $191 = $1,036 - $191 = $845;
C. (19 × $16) + (2 × $14) = $332;
D. $1,036 - $332 = $704;
E. $1,036 / (8 + 24 + 30 + 19) = $12.79; $12.79 × 21 = $268.59;
F. 1,036 - 268.59 = $767.41.
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
70) Calculate cost of ending inventory using the retail method:
Cost | Retail Price | |
Beginning Inventory | $60,000 | $102,000 |
Purchases during the year | $25,000 | $40,000 |
Sales for Year | $60,000 |
($60,000 + $25,000) = $85,000; ($102,000 + $40,000) = $142,000; $85,000 / $142,000 = .5986; $142,000 - $60,000 = $82,000; .5986 × $82,000 = $49,085.20.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
71) Calculate inventory turnover at cost (to nearest tenth):
Ending Inventory | $35,000 | Beginning Inventory | $25,000 |
Cost of goods sold | $42,00 | Net Sales | $5,800 |
($35,000 + $25,000) = $60,000 / 2 = $30,000; $42,000 / $30,000 = 1.4.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
72) Complete (assume $50,000 of overhead to be distributed):
Sq. Ft. | Ratio | Amt of Overhead Allocated | |
Dept. A | 20,000 | A | B |
Dept. B | 80,000 | C | D |
A. 20,000 / 100,000 = .2; B. 2 × $50,000 = $10,000; C. 80,000 / 100,000 = .8; D. 8 × $50,000 = $40,000.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
73) Jane's April 1, inventory had a cost of $48,000 and a retail value of $70,000. During April, net purchases cost $210,000 with a retail value of $390,000. Net sales at retail for Jane for April were $280,000. Calculate the cost of ending inventory using the retail inventory method.
$48,000 + $210,000 = $258,000; $70,000 + $390,000 = $460,000; $460,000 - $280,000 = $180,000; $258,000 / $460,000 = .5609; $180,000 × .5609 = $100,962,
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
74) Moore Supermarket began the year with 300 boxes of oat flake cereal with a unit cost of $1.89. During the year the following additional purchases were made:
May 1 | 200 boxes @ $2.10 each |
June 1 | 400 boxes @ $2.20 each |
August 1 | 250 boxes @ $2.40 each |
At the end of the year, Moore had 475 boxes of oat flakes on the shelf and in the back room. Assuming LIFO, calculate (A) cost of ending inventory and (B) cost of goods sold.
A. (300 × $1.89) + (175 × $2.10) = $934.50; B. (200 × $2.10 + 400 × $2.20 + 250 × $2.40 + 300 × $1.89) = $2,467; $2,467 - $934.50 = $1,532.50.
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
75) Melvin Corporation allocates overhead to all departments based on the square footage occupied by each department. The shoe department occupies 3,000 sq. ft., the toy department 6,000 sq. ft., and the dress department 7,000 sq. ft. Total overhead to be allocated is $64,000. What is the amount allocated to the dress department?
(3,000 + 6,000 + 7,000) = 16,000 sq. ft.; 7,000 / 16,000 = .4375; .4375 × $64,000 = $28,000.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
76) Given the following, calculate the estimated cost of ending inventory using the gross profit method.
Gross profit on sales | 28% |
Beg Inventory Jan 1, 2017 | $60,000 |
Net Purchases | $44,000 |
Net Sales at Retail | $55,000 |
($60,000 + $44,000) = $104,000; $55,000 × (1-.28) = $39,600; $104,000 - $39,600 = $64,400.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (2) Calculate the estimated inventory using the gross profit method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
77) Pete's Convenience Store has a beginning inventory of 12 cans of soup at a cost of $.85 each. During the year, the store purchased 4 at $.95, 6 at $1.05, 7 at $1.35, and 8 at $1.50. By the end of the year, 18 cans were sold. Calculate (A) the number of cans of soup in the ending inventory and (B) the cost of ending inventory under LIFO, FIFO, and weighted average.
B. $17.15 (LIFO), $25.65 (FIFO), $21.47 (weighted average)
A. (12 + 4 + 6 + 7 + 8) - 18 = 37 - 18 = 19;
B. LIFO = (12 × $.85) + (4 × .$95) + (3 × $1.05) = $17.15; FIFO = (8 × $1.5) + (7 × $1.35) + (4 × $1.05) = $25.65; Weighted Avg = (12 × $.85) + (4 × $.95) + (6 × $1.05) + (7 × $1.35) + (8 × $1.50) = $41.75; $41.75 / (12 + 4 + 6 + 7 + 8) =$1.13; $1.13 × 19 = $21.47.
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
78) Molls Co. allocates overhead expenses to all departments on the basis of the floor space (sq. ft.) occupied by each department. The total overhead expenses for a recent year amounted to $80,000. Department A occupied 4,000 square feet, Department B 7,000 square feet, and Department C 9,000 square feet. What is the amount of the overhead allocated to Department C?
Total = (4,000 + 7,000 + 9,000) = 20,000 sq. ft.; 9,000 / 20,000 = .45; .45 × $80,000 = $36,000.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
79) French Co. has a beginning inventory of $77,000 and an ending inventory of $80,000. Sales were $280,000. Assume French's markup rate on selling price is 40%. Based on the selling price, what is the inventory turnover at cost? Round to the nearest hundredth.
($77,000 + $80,000) / 2 = $78,500; $280,000 × .6 = $168,000; $168,000 / $78,500 = 2.14.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
80) Bob's Clothing Shop's inventory at cost was $30,000 on January 1. Its retail value is $42,000. During the year, Bob's Clothing Shop purchased additional merchandise at a cost of $196,000 with a retail value of $368,000. The net sales at retail for the year were $310,000. Calculate Bob's inventory at cost by the retail method. Round the cost ratio to the nearest whole percent.
Retail = ($42,000 + $368,000) = $410,000; Cost = ($30,000 + $196,000) = $226,000; Cost Ratio = $226,000 / $410,000 = .55 = 55%; $410,000 - $310,000 = $100,000; $100,000 × .55 = $55,000.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
81) Blue Company on January 1, had inventory costing $65,000; during January net purchases were $119,000. Over recent years, Blue's gross profit has averaged 40% on sales. Assuming that the company has net sales of $190,000, calculate the estimated cost of ending inventory by using the gross profit method.
Cost of good avail for sale = ($65,000 + $119,000) = $184,000; Est cost of goods sold = $190,000 × (1 - .4) = $190,000 × .6 = $114,000; $184,000 - $114,000 = $70,000.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (2) Calculate the estimated inventory using the gross profit method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
82) Complete the table:
Beg Inventory | Units | Unit Cost | Dollar Cost | |
Jan 1 | 10 | $7.00 | A | |
Apr 11 | 30 | $12.00 | B | |
May 17 | 40 | $13.00 | C | |
Dec 5 | 20 | $15.00 | D |
A. $70;
B. $360;
C. $520;
D. $300
A. 10 × $7.00 = $70.00; B. 30 × $12.00 = $360.00; C. 40 × $13.00 = $520.00; D. 20 × $15.00 = $300.00.
Difficulty: 2 Medium
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
83) Complete the table:
Beg Inventory | Units | Unit Cost | Dollar Cost | |
Jan 1 | 20 | $8.00 | A | |
May 10 | 15 | $11.00 | B | |
June 30 | 17 | $20.00 | C | |
Dec 10 | 12 | $21.00 | D |
A. 20 × $8.00 = $160.00; B. 15 × $11.00 = $165.00; C. 17 × $20.00 = $340.00; D. 12 × $21.00 = $252.00.
Difficulty: 2 Medium
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
84) Given a Beginning Inventory of 10 units at $7 per unit, and purchases (in order) of 30 units at $12 per unit, 40 units at $13 per unit, and 20 units at $15 per unit, calculate (ending inventory shows 20 units):
LIFO | FIFO | Weighted-Average | |
Cost of Ending Inventory | A | C | E |
Cost of Goods Sold | B | D | F |
20 units not sold
A. (10 × $7) + (10 × $12) = $190;
B. (10 × $7 + 30 × $12 + 40 × $13 + 20 × $15) = $1,250; $1,250 - $190 = $1,060;
C. 20 × $15 = $300;
D. $1,250 - $300 = $950;
E. $1,250 / (10 + 30 + 40 + 20) = $12.50; $12.50 × 20 = $250;
F. $1,250 - $250 = $1,000.
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
85) Given the following:
Units | Unit Cost | Dollar Cost | ||
Beginning Inventory | Jan 1 | 20 | $8.00 | A |
May 10 | 15 | $11.00 | B | |
June 30 | 17 | $20.00 | C | |
Dec. 10 | 12 | $21.00 | D |
24 units are not sold.
Calculate each of the following:
LIFO | FIFO | Weighted-Average | |
Cost of Ending Inventory | A | C | E |
Cost of Goods Sold | B | D | F |
A. (20 × $8) + (4 × $11) = $204;
B. (20 × $8 + 15 × $11 + 17 × $20 + 12 × $21) = $917; $917 - $204 = $713;
C. (12 × $21) + (12 × $20) = $492;
D. $917 - $492 = $425;
E. $917 / (20 + 15 + 17 + 12) = $14.328125; $14.33 × 24 = $343.92; $917 - $343.92 = $573.08.
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
86) Calculate using retail method:
Cost | Retail Price | |
Beginning Inventory | $75,000 | $115,000 |
Purchases during the year | $37,000 | $55,000 |
Sales for year | $71,000 | |
(round cost ratio to nearest thousandth) | ||
($115,000 + $55,000) = $170,000; ($75,000 + $37,000) = $112,000; $112,000 / $170,000 = .659; $170,000 - $71,000 = $99,000; .659 × $99,000 = $65,241.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
87) Calculate using retail method:
Cost | Retail Price | |
Beginning Inventory | $80,000 | $120,000 |
Purchases during the year | $42,000 | $57,000 |
Sales for year | $73,000 | |
(round cost ratio to nearest thousandth) | ||
($120,000 + $57,000) = $177,000; ($80,000 + $42,000) = $122,000; $122,000 / $177,000 = .689; $177,000 - $73,000 = $104,000; $104,000 × .689 = $71,656.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
88) Calculate inventory turnover at cost (to nearest hundredth):
Ending Inventory | $25,000 | Beginning Inventory | $15,000 |
Cost of Goods Sold | $43,000 | Net Sales | $55,800 |
($25,000 + $15,000) / 2 = $20,000; $43,000 / $20,000 = 2.15.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
89) Calculate inventory turnover at cost (to nearest hundredth):
Ending Inventory | $30,000 | Beginning Inventory | $20,000 |
Cost of Goods Sold | $48,000 | Net Sales | $80,000 |
($30,000 + $20,000) / 2 = $25,000; $48,000 / $25,000 = 1.92.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
90) Complete (assume $60,000 of overhead to be distributed):
Sq Ft | Ratio | Amt of Overhead Allocated | |
Department A | 10,000 | A | B |
Department B | 30,000 | C | D |
A. 10,000 / 40,000 = .25; B. 25 × $60,000 = $15,000; C. 30,000 / 40,000 = .75; D. 75 × $60,000 = $45,000.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
91) Complete (assume $100,000 of overhead to be distributed):
Sq Ft | Ratio | Amt of Overhead Allocated | |
Department A | 25,000 | A | B |
Department B | 75,000 | C | D |
A. 25,000/100,000 = .25; B. 25 × $100,000 = $25,000; C. $75,000 / $100,000 = .75; D. 75 × $100,000 = $75,000.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
92) Calculate estimated cost of ending inventory using the gross profit method:
Gross profit on sales | 35% |
Beg inventory June 1, 2017 | $22,000 |
Net purchases | $6,600 |
Net sales at retail for June | $12,000 |
($22,000 + $6,600) = $28,600; $12,000 × (1 - .35) = $12,000 × .65 = $7,800; $28,600 - $7,800 = $20,800.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (2) Calculate the estimated inventory using the gross profit method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
93) Calculate estimated cost of ending inventory using the gross profit method:
Gross profit on sales | 40% |
Beg inventory Aug 1, 2017 | $38,000 |
Net purchases | $9,900 |
Net sales at retail for June | $27,000 |
($38,000 + $9,900) = $47,900; $27,000 × (1 - .4) = $16,200; $47,900 - $16,200 = $31,700.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (2) Calculate the estimated inventory using the gross profit method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
94) The following information was provided to Mel Blank, owner of Morse Market. Can you help Mel calculate the cost of ending inventory under LIFO, FIFO, and weighted average? During the year, a total of 1,200 were sold.
January 1 inventory | 500 at $2 |
April 10 | 300 at $3 |
June 20 | 500 at $4 |
August 1 | 200 at $5 |
November 15 | 100 at $11 |
LIFO: 400 × $2 = $800; FIFO: 100 × $11 + 200 × $5 + 100 × $4 = $2,500; Weighted Average: (500 + 300 + 500 + 200 + 100) - 1,200 = 400 left in inv; 500 × $2 + 300 × $3 + 500 × $4 + 200 × $5 + 100 × $11 = $6,000; $6,000 / (500 + 300 + 500 + 200 + 100) = $6,000 / 1,600 = $3.75; $3.75 × 400 = $1,500.
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
95) Jane and Bill Co. started with a beginning inventory of $90,000. Ending inventory was $110,000. Cost of goods was $260,000. Complete the inventory turnover at cost for Jane and Bill Co. (to the nearest tenth).
($90,000 + $110,000) / 2 = $100,000; $260,000 / $100,000 = 2.6.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
96) Using the retail method, calculate the value of ending inventory at cost for Morse Co. Round the cost ratio to the nearest hundredth.
Cost | Retail | |
Beginning Inventory | $130,000 | $190,000 |
Purchases during year | $90,000 | $135,000 |
Sales for year: $140,000 |
($130,000 + $90,000) = $220,000; ($190,000 + $135,000) = $325,000; $220,000 / $325,000 = .676; $325,000 - $140,000 = $185,000; .68 × $185,000 = $125,800.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (2) Calculate the estimated inventory using the gross profit method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
97) Javon Corp. had a beginning inventory of 300 cans of paint on January 1, at a cost of $2,100. During the year, the following purchases were made:
February 15 | 200 cans at $8 each |
May 5 | 250 cans at $10 each |
December 8 | 100 cans at $12 each |
Assuming 310 cans were left in inventory, what is the cost of ending inventory under the LIFO method?
(300 × $7) + (10 × $8) = $2,180.
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
98) Ron Co. has a gross profit on sales of 42%. On November 1, 2017, beginning inventory was $9,000. Net purchases for the month were $35,000. Assuming Ron has retail sales of $60,000 in November, what is the estimated cost of ending inventory using the gross profit method?
($9,000 + $35,000) = $44,000; $60,000 × (1 - .42) = $34,800; $44,000 - $34,800 = $9,200.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (2) Calculate the estimated inventory using the gross profit method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
99) Given the following information, you have been requested by your supervisor to submit the cost of ending inventory under LIFO, FIFO, and weighted average. At year end 850 units remained in inventory.
January 1 inventory | 2,500 at $2.95 |
April 9 | 4,000 at $4.00 |
June 15 | 1,000 at $6.50 |
August 10 | 500 at $7.00 |
December 9 | 200 at $8.50 |
850 × $2.95 = $2,507.50 (LIFO); 200 × $8.50 + 500 × $7 + 150 × $6.5 = $6,175.00 (FIFO); 2,500 × $2.95 + 4,000 × $4 + 1,000 × $6.5 + 500 × $7 + 200 × $8.5 = $35,750; $35,750 / (2,500 + 4,000 + 1,000 + 500 + 200) = 4.28; 4.28 × $850 = $3,638 (weighted average).
Difficulty: 3 Hard
Topic: LU 18-01 Assigning Costs to Ending Inventory—Specific Identification; Weighted Average; FIFO; LIFO
Learning Objective: 18-01 (1) List the key assumptions of each inventory method.; 18-01 (2) Calculate the cost of ending inventory and cost of goods sold for each inventory method.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
100) Moore Co. has a beginning inventory at a cost of $50,000 and an ending inventory at a cost of $90,000. Sales were $150,000. Assume Moore's markup rate is 40%. Based on the selling price, what is the inventory turnover at cost? (Round to the nearest hundredth.)
($50,000 + $90,000) / 2 = $70,000; $90,000 / $70,000 = 1.29.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (3) Explain and calculate inventory turnover.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
101) Bill Company's total overhead for a recent year was $100,000. Department A. occupies 18,500 sq. ft., Department B. 12,000 sq. ft., and Department C. 4,000 sq. ft. What is amount of overhead allocated to Department B? (Round to the nearest whole percent.)
18,500 + 12,000 + 4,000 = 34,500 sq. ft.; 12,000 / 34,500 = .347826; .347826 × $100,000 = .35 × $100,000 = $35,000.
Difficulty: 3 Hard
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (4) Explain overhead; allocate overhead according to floor space and sales.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
102) Calculate the average inventory for the following:
Beginning Inventory: $29,600
Ending Inventory: $6,500
($29,600 + $6,500) / 2 = $18,050.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
103) Calculate using the gross profit method for the following:
Gross profit on sales: 47%
Beginning inventory on July 1: $49,009
Net purchase: $18,252
Net sales at retail for July: $14,400
$49,009 + $18,252 = $67,261; $14,400 × (1 - .47) = $7,632; $67,261 - $7,632 = $59,629.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (2) Calculate the estimated inventory using the gross profit method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
104) Calculate the inventory turnover at cost for the following: average inventory $20,590, cost of goods sold $50,900, net sales $119,800. (Round your answer to the nearest tenth.)
$50,900 / $20,590 = 2.5.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (2) Calculate the estimated inventory using the gross profit method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
105) Calculate a cost ratio for the following:
Cost of goods available for sale at cost: $47,123
Cost of goods available for sale at retail: $55,605
$47,123 / $55,605 = .85.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
106) Calculate average inventory for the following:
Beginning inventory: $123,485.23
Ending inventory: $99,173.16
($123,485.23 + $99,173.16) / 2 = $111,329.20.
Difficulty: 2 Medium
Topic: LU 18-02 Retail Method; Gross Profit Method; Inventory Turnover; Distribution of Overhead
Learning Objective: 18-02 (1) Calculate the cost ratio and ending inventory at cost for the retail method.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
Document Information
Connected Book
Business Math Procedures 13e Test Bank with Answers
By Jeffrey Slater