Exam 18: Inventory and Overhead

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:

Match the following terms with their definitions. -Inventory turnover

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?

Match the following terms with their definitions. -Weighted average

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

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?

During inflation, LIFO produces the highest possible income for a company.

A company can change from LIFO to FIFO without notifying the Internal Revenue Service.

The retail method:

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:

Match the following terms with their definitions. -Periodic

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)

During inflation, the best method to use in inventory valuation that produces the smallest amount of profit is:

Overhead expense can be allocated to particular departments.

Overhead expenses are:

Complete (assume $50,000 of overhead to be distributed): Amt of Overhead Sq. Ft. Ratio Allocated Dept. A 20,000 A B Dept. B 80,000 C D

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

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.

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

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