Exam 7: Inventories

Average inventory equals $200,000,and cost of goods sold equals $442,000.Days' inventory on hand equals

Use this inventory information for the month of July to answer the following question. -What is cost of goods sold under the specific identification method?

Goods held on consignment are

Use this inventory information for the month of March to answer the following question. -Assuming that a periodic inventory system is used,what is cost of goods sold on a FIFO basis?

Direct materials and direct labor are components of manufacturing overhead.

In periods of rising inventory prices,the LIFO method will result in a higher inventory valuation than will the average-cost method.

In periods of rising prices,the LIFO method will result in a larger gross margin than the FIFO method.

Costs incurred in storing inventory usually are not included in inventory costs.

Given the following information about purchases and sales during the year,compute the cost to be assigned to ending inventory under each of three methods: (a)average-cost, (b)FIFO,and (c)LIFO.(Show your work. ) Assume that a periodic inventory system is used.

Despite its advantages,the just-in-time operating environment produces increased carrying costs for inventory.

Freight charges associated with the purchase of inventory normally are not included in inventory cost.

The specific identification method and the FIFO method produce the same results under both the perpetual and periodic inventory systems.

Under the perpetual inventory system,cost of goods sold is not recorded until the end of the accounting period.

Both the retail method and the gross profit method are useful in estimating the inventory cost.

Use the following figures (stated in millions of dollars)to compute the inventory turnover and the days' inventory on hand within one decimal point: a.Inventory turnover = ___________________ b.Days' inventory on hand = ___________________

Which of the following terms best describes the assumption made in applying the four inventory methods?

Periodic and perpetual are examples of inventory costing systems.

Use this inventory information for the month of August to answer the following question. Assuming that a perpetual inventory system is used. -What is ending inventory (rounded)under the average-cost method?

Goods held on consignment should be included in the consignee's ending inventory.

The average-cost method under a periodic inventory system relies on a simple average calculation as total cost of goods available for sale divided by the total units availabler for sale.