Exam 7: Inventories

Use this information to answer the following question. A periodic inventory system is used. Using the specific identification method and assuming that 50 of the items left are from the October 13 purchase and the rest are from the October 20 purchase,the cost assigned to ending inventory is

McCaffy Company uses a periodic inventory system.It sold 1,000 units of Product H.Its beginning inventory and purchases during the month were as follows: Compute the cost of the ending inventory under each of three methods: (a)average-cost,(b)LIFO,and (c)FIFO.(Show your work.)

Powell's inventory turnover is 4.8.What is Powell's day's inventory on hand?

The LIFO method agrees with the actual physical goods flow in most businesses.

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.

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.

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

Which costing method tends to level out the effects of cost increases or decreases?

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

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

Use this information to answer the following question. Assuming that the specific identification method is used and that ending inventory consists of 15 units from each of the three purchases and five units from the January 1 inventory,cost of goods sold is

If cost of goods sold is understated by $6,000 for this year,what effect will this have on income before income taxes in the following year?

The FIFO inventory method does not produce the most up-to-date figure for ending inventory.

A retail store prices its goods to achieve a gross margin of 35 percent.Up to the date of a fire that destroyed the store's inventory,sales were $250,000 and cost of goods available for sale was $175,000.The estimated cost of the inventory destroyed is

The matching of revenue with inventory costs is best achieved with the FIFO method.

Goods in transit shipped FOB destination should not be included in the buyer's ending inventory.

An overstatement of beginning inventory results in

Lee Sisters reports income before income taxes of $20,000 during 2014.If beginning inventory was understated by $6,000 and ending inventory was overstated by $2,400,calculate corrected income before income taxes for the year.(Show your work.)

What is a LIFO liquidation,and what is its effect on income before income taxes?

Manufacturing overhead would not include which of the following costs?