Question 1

Overhead expenses are allocated to particular departments:

Accepted Answer

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 
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 D

Question 2

Inventory turnover at retail is equal to net sales divided by:

Accepted Answer

A) Beginning inventory at retail 
B) Average inventory at retail 
C) Beginning inventory at cost 
D) Average inventory at cost 
E) None of these 
A) Beginning inventory at retail 
B) Average inventory at retail 
C) Beginning inventory at cost 
D) Average inventory at cost 
E) None of these B

Question 3

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:

Accepted Answer

A) $30,600 
B) $29,400 
C) $60,000 
D) $42,000 
E) None of these 
A) $30,600 
B) $29,400 
C) $60,000 
D) $42,000 
E) None of these A

Question 4

A perpetual inventory system continually updates inventory records.

Accepted Answer

A) True 
 B)False

Question 5

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):

Accepted Answer

A) $1,800 
B) $9,429 
C) $9,900 
D) $39,600 
E) None of these 
A) $1,800 
B) $9,429 
C) $9,900 
D) $39,600 
E) None of these

Question 6

The specific identification method might be used by companies with high-cost items.

Accepted Answer

A) True 
 B)False

Question 7

FIFO assumes all but one of the following:

Accepted Answer

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 
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

Question 8

In specific identification, which one is not true?

Accepted Answer

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 
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

Question 9

Compared with cost due to theft, spoilage, etc., inventory turnover at retail is usually:

Accepted Answer

A) Higher 
B) Much higher 
C) Lower 
D) Much lower 
E) None of these 
A) Higher 
B) Much higher 
C) Lower 
D) Much lower 
E) None of these

Question 10

Overhead expense can be allocated to particular departments.

Accepted Answer

A) True 
 B)False

Question 11

The cost ratio times ending inventory at cost equals ending inventory at retail.

Accepted Answer

A) True 
 B)False

Question 12

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):

Accepted Answer

A) 5.15 
B) 3.25 
C) 2.35 
D) 5.23 
E) None of these 
A) 5.15 
B) 3.25 
C) 2.35 
D) 5.23 
E) None of these

Question 13

To use the retail method of estimating ending inventory, the figure for net sales at retail must be known.

Accepted Answer

A) True 
 B)False

Question 14

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.

Accepted Answer

A) $23,600 
B) $63,600 
C) $14,936 
D) $14,396 
E) None of these 
A) $23,600 
B) $63,600 
C) $14,936 
D) $14,396 
E) None of these

Question 15

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:

Accepted Answer

A) $30,000 
B) $18,600 
C) $18,000 
D) $12,400 
E) None of these 
A) $30,000 
B) $18,600 
C) $18,000 
D) $12,400 
E) None of these

Question 16

Given the following: 
FIFO method: 16 units left in inventory   The cost of goods sold is:

Accepted Answer

A) $5,000 
B) $10,000 
C) $4,965 
D) $5,225 
E) None of these 
A) $5,000 
B) $10,000 
C) $4,965 
D) $5,225 
E) None of these

Question 17

All but which one of the following is information needed to calculate inventory valuation by the retail method?

Accepted Answer

A) Beginning inventory at cost and retail 
B) Cost of net purchases at cost and retail 
C) Net sales at cost 
D) Net sales at retail 
E) None of these 
A) Beginning inventory at cost and retail 
B) Cost of net purchases at cost and retail 
C) Net sales at cost 
D) Net sales at retail 
E) None of these

Question 18

A periodic inventory system requires a physical count of its inventory once a month.

Accepted Answer

A) True 
 B)False

Question 19

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 is 40%. Based on the selling price, the inventory turnover at cost (to the nearest hundredth) is:

Accepted Answer

A) 2.17 
B) 2.22 
C) 1.47 
D) 1.58 
E) None of these 
A) 2.17 
B) 2.22 
C) 1.47 
D) 1.58 
E) None of these

Question 20

The cost ratio in the retail method is found by the cost of goods available for sale at cost divided by:

Accepted Answer

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 
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

Overhead expenses are allocated to particular departments:

Inventory turnover at retail is equal to net sales divided by:

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 perpetual inventory system continually updates inventory records.

The specific identification method might be used by companies with high-cost items.

FIFO assumes all but one of the following:

In specific identification, which one is not true?

Compared with cost due to theft, spoilage, etc., inventory turnover at retail is usually:

Overhead expense can be allocated to particular departments.

The cost ratio times ending inventory at cost equals ending inventory at retail.

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):

To use the retail method of estimating ending inventory, the figure for net sales at retail must be known.

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:

Given the following: FIFO method: 16 units left in inventory The cost of goods sold is:

All but which one of the following is information needed to calculate inventory valuation by the retail method?

A periodic inventory system requires a physical count of its inventory once a month.

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 is 40%. Based on the selling price, the inventory turnover at cost (to the nearest hundredth) is:

The cost ratio in the retail method is found by the cost of goods available for sale at cost divided by:

Whole Number: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How to Approach to Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes and the Discount Process

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Appreciation

Sales Excise and Property Taxes

Life, Fire and Auto Insurance

Stocks, Bonds and Mutual Funds

Business Statistics

Filters

Exam 18: Inventory and Overhead

Overhead expenses are allocated to particular departments:

Inventory turnover at retail is equal to net sales divided by:

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 perpetual inventory system continually updates inventory records.

The specific identification method might be used by companies with high-cost items.

FIFO assumes all but one of the following:

In specific identification, which one is not true?

Compared with cost due to theft, spoilage, etc., inventory turnover at retail is usually:

Overhead expense can be allocated to particular departments.

The cost ratio times ending inventory at cost equals ending inventory at retail.

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):

To use the retail method of estimating ending inventory, the figure for net sales at retail must be known.

Given the following: FIFO method: 16 units left in inventory The cost of goods sold is:

All but which one of the following is information needed to calculate inventory valuation by the retail method?

A periodic inventory system requires a physical count of its inventory once a month.

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 is 40%. Based on the selling price, the inventory turnover at cost (to the nearest hundredth) is:

The cost ratio in the retail method is found by the cost of goods available for sale at cost divided by:

Whole Number: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How to Approach to Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes and the Discount Process

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Appreciation

Sales Excise and Property Taxes

Life, Fire and Auto Insurance

Stocks, Bonds and Mutual Funds

Business Statistics

Filters