Exam 9: Inventories: Additional Valuation Issues

Confectioners, a chain of candy stores, purchases its candy in bulk from its suppliers.For a recent shipment, the company paid $3,000 and received 8,500 pieces of candy that are allocated among three groups.Group 1 consists of 2,500 pieces that are expected to sell for $0.25 each.Group 2 consists of 5,500 pieces that are expected to sell for 0.60 each.Group 3 consists of 500 pieces that are expected to sell for $1.20 each.Using the relative sales value method, what is the cost per item in group 1?

The gross profit method of inventory valuation is invalid when

A markup of 40% on cost is equivalent to what markup on selling price?

On January 1, 2010, the merchandise inventory of Glaus, Inc.was $800,000.During 2010 Glaus purchased $1,600,000 of merchandise and recorded sales of $2,000,000.The gross profit rate on these sales was 25%.What is the merchandise inventory of Glaus at December 31, 2010?

Use the following information for questions. Miles Company, a wholesaler, budgeted the following sales for the indicated months: All merchandise is marked up to sell at its invoice cost plus 20%.Merchandise inventories at the beginning of each month are at 30% of that month's projected cost of goods sold. -The cost of goods sold for the month of June is anticipated to be

When the conventional retail inventory method is used, markdowns are commonly ignored in the computation of the cost to retail ratio because

Crane Sales Company uses the retail inventory method to value its merchandise inventory.The following information is available for the current year: If the ending inventory is to be valued at the lower-of-cost-or-net realizable value, what is the cost to retail ratio?

A disadvantage of the gross profit method is that it uses past percentages in determining the markup.

A major advantage of the retail inventory method is that it

Henke Co.uses the retail inventory method to estimate its inventory for interim statement purposes.Data relating to the computation of the inventory at July 31, 2010, are as follows: Under the lower-of-cost-or-net realizable value method, Henke's estimated inventory at July 31, 2010 is

On April 15 of the current year, a fire destroyed the entire uninsured inventory of a retail store.The following data are available: The amount of the inventory loss is estimated to be

Given the historical cost of product Dominoe is $65, the selling price of product Dominoe is $90, costs to sell product Dominoe are $16, and the cost to complete the product is $14, what is the amount that should be used to value the inventory under the lower-of-cost-or-net realizable value method?

In the retail inventory method, abnormal shortages are deducted from both the cost and retail amounts and reported as a loss.

In a basket purchase, the cost of the individual assets acquired is determined on the basis of their relative sales value.

Which of the following statements is incorrect regarding the lower-of-cost-or-net realizable value (LCNRV)?

Fry Corporation's computation of cost of goods sold is: The average days to sell inventory for Fry are

At the end of the fiscal year, Apha Airlines has an outstanding purchase commitment for the purchase of 1 million gallons of jet fuel at a price of $4.60 per gallon for delivery during the coming summer.The company prices its inventory at the LCNRV.If the market price for jet fuel at the end of the year is $4.25, how would this situation be reflected in the annual financial statements?

What condition is not necessary in order to use the retail method to provide inventory results?

Under International Financial Reporting Standards (IFRS), agricultural activity results in which of the following types of assets? I.Agricultural produce II.Biological assets

Situations in which net realizable value is used to value inventory include