Exam 20: Inventory Management and Variable and Absorption Costing

What type of firm could have work-in-process inventory?

When comparing balance sheets, which type of company could not have a supplies inventory?

Exhibit 20-6 Vilas Company manufactured 80,000 units during July but only sold 65,000 of these units at a price of $20 each. At the beginning of the month, Vilas had 5,000 units in finished goods inventory. The following unit costs are known for June and July: Vilas Company uses the first-in first-out (FIFO) method. Refer to Exhibit 20-6. What is net income for July using the absorption costing method?

Financial holding cost in a merchandising firm is calculated by which formula?

During the first quarter of 2011, Dewey Company had an annual rate of 14%. The inventory balances during the quarter were: Calculate the financial holding costs for the first quarter of 2011.

Exhibit 20-5 Barron Company manufactured 150,000 units during the year but only sold 130,000 of these units. At the beginning of the year, Barron had no beginning finished goods inventory. The following unit costs were incurred during the year: Refer to Exhibit 20-5. If Barron Company sold each unit for $13, what is Barron's net income for the year using absorption costing?

Hannafin Company decreased the size of inventory order quantities below the quantity determined by EOQ. What is the impact on total annual ordering costs?

Exhibit 20-6 Vilas Company manufactured 80,000 units during July but only sold 65,000 of these units at a price of $20 each. At the beginning of the month, Vilas had 5,000 units in finished goods inventory. The following unit costs are known for June and July: Vilas Company uses the first-in first-out (FIFO) method. Refer to Exhibit 20-6. What is net income for July using the variable costing method?

The CPA firm of Peck, Williams, and Shafner is conducting an audit of Monolith Enterprises. The audit is estimated to take 4 months to complete and will use $4,000 in supplies, $200,000 in labor, and $320,000 in overhead. Peck's annual rate is 18%. What are the financial holding costs on this project?

What is the main difference between an absorption costing system and a variable costing system?

Exhibit 20-3 Florence Company sells lawn mowers. The following information is available for Florence's inventory for 2011: Refer to Exhibit 20-3. Calculate Florence's costs due to the price increase for the year.

Franklin Company manufactures picture frames. The following information is available for 2011: Create an income statement for Franklin Company using the absorption costing method.

The private investigation firm of Watson & Holmes is conducting an investigation for a wealthy movie star. The investigation is estimated to take 6 months to complete and will use $2,000 in supplies, $120,000 in labor, and $80,000 in overhead. Watson & Holmes' cost of capital is 12%. What are the financial holding costs on this project?

Inventory shrinkage is caused by:

Which of the following is not included in carrying costs?

Economic profit is:

Exhibit 20-4 The Hanover Catalog Company has the following information available concerning one of its inventory items: Refer to Exhibit 20-4. The EOQ for this inventory item is:

The private investigation firm of Watson & Holmes is conducting an investigation for a wealthy movie star. The investigation is estimated to take 6 months to complete and will use $2,000 in supplies, $120,000 in labor, and $80,000 in overhead. Watson & Holmes' cost of capital is 12%. At the end of the sixth month, Watson & Holmes finds that the investigation will take an additional 2 months to complete and another $80,000 in labor and overhead. What are the additional financial holding costs for the 2 extra months on this project?

When comparing balance sheets, which type of company has a significant materials inventory?

Last year, Racine Company's income under absorption costing was $15,000 lower than its income under variable costing. The company had total production costs of $24 per unit, of which $14 was variable costs. No selling expenses were incurred this year. Racine sold 25,000 units during the year. How many units were produced during the year?