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CH 6 Exam 2016

The document is an exam for BUS1510, focusing on inventory costing methods, including multiple choice questions and exercises related to inventory valuation, cost of goods sold, and inventory turnover. It includes questions on FIFO, LIFO, average-cost methods, and specific identification, as well as practical exercises requiring calculations based on provided data. The exam assesses understanding of inventory management concepts and their application in accounting.

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j.rodriguez
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13 views2 pages

CH 6 Exam 2016

The document is an exam for BUS1510, focusing on inventory costing methods, including multiple choice questions and exercises related to inventory valuation, cost of goods sold, and inventory turnover. It includes questions on FIFO, LIFO, average-cost methods, and specific identification, as well as practical exercises requiring calculations based on provided data. The exam assesses understanding of inventory management concepts and their application in accounting.

Uploaded by

j.rodriguez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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BUS1510~Chapter 6 Exam

Name: __________________________ Date: _____________

PART I…
Multiple Choice ~ On the answer sheet, write the letter that best answers or completes each of the
following questions or statements.

1. Under the average-cost method of the perpetual system, an average is computed after
A)
B)

2. All of the following are inventory costing methods except


A) first-in, first-out. C) periodic
B) average-cost. D) specific identification

3. Which of the following is an inventory processing system?


A) Perpetual C) Lower of cost or market
B) Last-in, first-out D) Average Cost

4. Cost of goods sold equals $500,000, and average inventory equals $200,000. Days' inventory
on hand equals
A) 91.3 days. C) 821.9 days
B) 146.0 days. D) 912.5 days

5. In the phrase lower of cost or market, what does market mean?


A) The cost of making the item and placing it on the market today.
B) The cost of getting the item into the market.
C) The cost of actually replacing the item today.
D) None of the above.

6. When comparing FIFO and LIFO inventory costing, which of the following usually happens?
A) LIFO shows a higher inventory value of ending inventory than FIFO.
B) FIFO and LIFO will have the same value of Cost of Goods Sold.
C) FIFO has a higher value of Cost of Goods Sold.
D) LIFO has a higher value of Cost of Goods Sold.

7. Inventory turnover is expressed in terms of


A) days. C) dollars.
B) a percentage. D) times.

8. Days' inventory on hand equals 365 divided by


A) inventory turnover. C) goods available for sale.
B) cost of goods sold. D) average inventory.

9. Which of the following is an inventory valuation method?


A) First-in, first-out. C) Lower-of-cost-or-market
B) Average-cost. D) Perpetual

Page 1
BUS1510~Chapter 6 Exam

10. June 1 Beginning inventory 10 units @ $120


5 Purchase 60 units @ $112
14 Sale 40 units
21 Purchase 30 units @ $116
30 Sale 28 units
Assuming that a periodic inventory system is used, what is cost of goods sold on a LIFO basis?
A) $7,696 C) $3,664
B) $7,736 D) $3,704

Exercises~ In the space provided on the answer sheet, answer each of the following. Show work.

11. Use the following figures (stated in millions of dollars) to compute the inventory
turnover and the days' inventory on hand:
Cost of goods sold: $6,584
Beginning inventory: $915
Ending inventory: $1,177

12. Assuming that ending inventory for 2007 was understated, indicate whether each of the
following will be understated (U), overstated (O), or not affected (N).
1. Beginning inventory for 2008.
2. Cost of Goods Sold for 2008.
3. Income Before Income Taxes for 2007.

Periodic Inventory System…Use the following data to complete # 18, 19, and 20.
September 1 Inventory 140 units @ $10 per unit $1,400
10 Purchase 200 units @ $11 per unit 2,200
25 Purchase 100 units @ $12 per unit 1,200
Goods available for Sale 440 units $4,800
Sales 255 units
Inventory, September 30 185 units
Units sold for $25 each.

13. Specific Identification Method…assume that the inventory consists of 100 units from the
September 10 purchase and 85 units from the September 25 purchase, calculate the cost of
ending inventory, cost of goods sold, and gross margin

14. FIFO Method… Calculate the cost of ending inventory, cost of goods sold, and gross margin
according to the FIFO method under the periodic inventory system.

PART II…Use the information that follows to calculate the ending inventory and cost of goods sold for
April and May using the Average-Cost Method and either FIFO or LIFO.
April 1 Beginning Inventory 50 units @ $102
10 Purchase 100 units @ $110
17 Sales 90 units
30 Ending Inventory 60 units
May 2 Purchase 100 units @ $108
14 Purchase 50 units @ $112
22 Purchase 60 units @ $117
30 Sale 200 units
31 Ending Inventory 70 units

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