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Exam 6: Inventories

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Question 1

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The inventory data for an item for November are: Using a perpetual system,what is the cost of the goods sold for November if the company uses FIFO?

A) $610
B) $600
C) $590
D) $580

E) None of the above
F) C) and D)

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Question 2

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During periods of increasing costs,the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method.

A) True
B) False

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Question 3

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Assume that three identical units of merchandise are purchased during October,as follows: ​ ​ Assume one unit is sold on October 31 for $28.Determine cost of goods sold,gross profit,and ending inventory under the FIFO method.

Which of the following measures the length of time it takes to acquire,sell,and replace inventory?

The units of an item available for sale during the year were as follows: ​ There are 48 units of the item in the physical inventory at December 31.The periodic inventory system is used.Determine the inventory cost by (a)the first-in,first-out method,(b)the last-in,first-out method,and (c)the average cost method.Show your work.

For the year ended December 31,Depot Max's cost of goods sold was $56,900.Inventory at the beginning of the year was $6,540.Ending inventory was $7,250.Depot Max's number of days' sales in inventory is closest to

Basic inventory data for April 30 are presented below for a business that employs the lower-of-cost-or-market basis of inventory valuation to each category. ​

What is the amount of the inventory at the end of the year using the FIFO method?

Under the LIFO inventory costing method,the most recent costs are assigned to ending inventory.

The units of Manganese Plus available for sale during the year were as follows: ​ There are 15 units of the product in the physical inventory at November 30.The periodic inventory system is used.Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.

Which of the following measures the relationship between cost of goods sold and the amount of inventory carried during the period?

Cost flow is in the reverse order in which costs were incurred when using

In valuing merchandise for inventory purposes,net realizable value is the estimated selling price less any direct costs of disposal.

​Which of the following will be the same amount regardless of the cost flow assumption adopted?

One negative effect of carrying too much inventory is risk that customers will change their buying habits.

When using the FIFO inventory costing method,the most recent costs are assigned to the cost of goods sold.

The units of an item available for sale during the year were as follows: ​ There are 19 units of the item in the physical inventory at December 31.The periodic inventory system is used.Determine the ending inventory cost using LIFO.

During August,the first month of the fiscal year,sales totaled $875,000 and the cost of merchandise available for sale totaled $850,000.Estimate the cost of the inventory as of August 31,based on an estimated gross profit rate of 45%.

FIFO reports higher gross profit and net income than the LIFO method when ​

Direct disposal costs do not include special advertising or sales commissions.