Exam 20: Inventory Management and Variable and Absorption Costing

Exhibit 20-1 The following information is for Saratoga Company: Refer to Exhibit 20-1. Determine the raw materials inventory turnover (rounded).

Which of the following is true regarding the variable inventory costing method?

Fiesta and Sierra both operate catalog sales firms. The following information is available for 2011 and 2012:

ABC Co. has a gross margin of $42,750. LMN Co. has a gross margin of $49,100. XYZ Co. has a gross margin of $38,190. All three companies sell the same product. Which company did a better job of selling its product?

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. Using absorption costing, what is the value of Barron's finished goods inventory at the end of the year?

The formula for the reorder point without safety stock is:

Exhibit 20-2 Calumet Company sells slippers. The following information is available for Calumet's inventory for 2011: Refer to Exhibit 20-2. Calculate Calumet's shrinkage loss for the year.

Mosten's Retail Outlet collected the following information regarding two of its inventory items:

Exhibit 20-4 The Hanover Catalog Company has the following information available concerning one of its inventory items: Refer to Exhibit 20-4. If there is a delay in shipping the item, approximately how many days can be covered by the safety stock?

Which of the following values would be the most desirable for inventory turnover?

Garner Industries increased the size of inventory order quantities above the quantity determined by EOQ. What is the impact on total annual carrying costs?

Garner Industries increased the size of inventory order quantities above the quantity determined by EOQ. If annual quantity demanded remains the same, the number of orders made during the year will:

Which of the following is not true of inventory turnover?

When comparing income statements, which type of company does not have a section for cost of goods or services sold?

Which of the following equations determines the total annual ordering costs of inventory?

Which of the following equations determines the total annual carrying costs of inventory?

Abernathy Imports determined that its most popular product has average daily sales of 200 units and maximum daily sales of 240 units. The lead time for this product is 5 days. Abernathy buys this product for $56 and sells it to customers for $99.

Exhibit 20-1 The following information is for Saratoga Company: Refer to Exhibit 20-1. Determine the work-in-process days in inventory. Assume a 365-day year.

EOQ is used to:

Exhibit 20-2 Calumet Company sells slippers. The following information is available for Calumet's inventory for 2011: Refer to Exhibit 20-2. Calculate Calumet's market loss for the year.