Question 1

Cost of goods sold is equal to cost of goods available for sale:

Accepted Answer

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 
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

Question 2

The retail method:

Accepted Answer

A) Is not an estimate 
B) Does not require a cost ratio 
C) Eliminates any need ever to take a physical inventory 
D) Aids a company in not having to calculate an inventory cost for each individual item 
E) None of these 
A) Is not an estimate 
B) Does not require a cost ratio 
C) Eliminates any need ever to take a physical inventory 
D) Aids a company in not having to calculate an inventory cost for each individual item 
E) None of these

Question 3

The gross profit method is a way to estimate the cost of ending inventory without a physical count.

Accepted Answer

A) True 
 B)False

Question 4

Inventory turnover at cost is net sales divided by average inventory at retail.

Accepted Answer

A) True 
 B)False

Question 5

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.

Accepted Answer

A) True 
 B)False

Question 6

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 their cost of goods sold for June?

Accepted Answer

A) $524 
B) $1,352 
C) $1,824 
D) $776 
E) None of these 
A) $524 
B) $1,352 
C) $1,824 
D) $776 
E) None of these

Question 7

Cost of goods sold equals cost of goods available for sale plus cost of ending inventory.

Accepted Answer

A) True 
 B)False

Question 8

Perpetual inventory does not have this characteristic:

Accepted Answer

A) High price, limited inventory 
B) Verified at some point by a physical count 
C) Low price, large inventory 
D) Utilizes scanners, computers, etc. 
E) None of these 
A) High price, limited inventory 
B) Verified at some point by a physical count 
C) Low price, large inventory 
D) Utilizes scanners, computers, etc. 
E) None of these

Question 9

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?

Accepted Answer

A) 3.57 
B) 3.5 
C) 5.5 
D) 3.0 
E) None of these 
A) 3.57 
B) 3.5 
C) 5.5 
D) 3.0 
E) None of these

Question 10

Clay's Fishing Shop's beginning inventory is $70,000 and ending inventory is $36,500. What was Clay's average inventory?

Accepted Answer

A) $53,250 
B) $48,000 
C) $35,000 
D) $18,250 
E) None of these 
A) $53,250 
B) $48,000 
C) $35,000 
D) $18,250 
E) None of these

Question 11

Weighted-average unit cost is total cost of goods available for sale divided by beginning number of units available for sale.

Accepted Answer

A) True 
 B)False

Question 12

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:

Accepted Answer

A) $28.00 
B) $12.00 
C) $21.00 
D) $3.50 
E) None of these 
A) $28.00 
B) $12.00 
C) $21.00 
D) $3.50 
E) None of these

Question 13

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:

Accepted Answer

A) 68% 
B) 32% 
C) 26% 
D) 42% 
E) None of these 
A) 68% 
B) 32% 
C) 26% 
D) 42% 
E) None of these

Question 14

In FIFO, the most recent cost is assigned to the inventory sold.

Accepted Answer

A) True 
 B)False

Question 15

Under certain circumstances, ending inventory could be valued at less than cost.

Accepted Answer

A) True 
 B)False

Question 16

In valuing inventory, the flow of costs does not always match the flow of goods.

Accepted Answer

A) True 
 B)False

Question 17

In the specific identification method, the flow of goods and the flow of costs are not the same.

Accepted Answer

A) True 
 B)False

Question 18

A cost ratio of $.68 means that for each $1 of retail inventory it costs the store $.68.

Accepted Answer

A) True 
 B)False

Question 19

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:

Accepted Answer

A) $1,400 
B) $3,200 
C) $1,530 
D) $3,150 
E) None of these 
A) $1,400 
B) $3,200 
C) $1,530 
D) $3,150 
E) None of these

Question 20

In the retail method the ending inventory at cost is calculated by multiplying the cost ratio times:

Accepted Answer

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 
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

Exam 18: Inventory and Overhead

Cost of goods sold is equal to cost of goods available for sale:

The retail method:

The gross profit method is a way to estimate the cost of ending inventory without a physical count.

Inventory turnover at cost is net sales divided by average inventory at retail.

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.

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 their cost of goods sold for June?

Cost of goods sold equals cost of goods available for sale plus cost of ending inventory.

Perpetual inventory does not have this characteristic:

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?

Clay's Fishing Shop's beginning inventory is $70,000 and ending inventory is $36,500. What was Clay's average inventory?

Weighted-average unit cost is total cost of goods available for sale divided by beginning number of units available for sale.

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:

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:

In FIFO, the most recent cost is assigned to the inventory sold.

Under certain circumstances, ending inventory could be valued at less than cost.

In valuing inventory, the flow of costs does not always match the flow of goods.

In the specific identification method, the flow of goods and the flow of costs are not the same.

A cost ratio of $.68 means that for each $1 of retail inventory it costs the store $.68.

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:

In the retail method the ending inventory at cost is calculated by multiplying the cost ratio times:

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