Inventory

Question 1

What is the basic inventory formula?

Answer 1

BI + Net P = EI + COGS

Question 2

What is the formula for Inventory Turnover Ratio?

Answer 2

ITO = COGS / Avg Inv

Question 3

What is the formula for determining allocated costs?

Answer 3

Total cost x the fraction allocated to the particular asset.

Question 4

Is freight in an inventoriable cost?

Answer 4

Yes

Question 5

Is warehousing an inventoriable cost?

Answer 5

Yes

Question 6

Is freight out an inventoriable cost?

Answer 6

No

Question 7

How do you determine LCM?

Answer 7

First determine market price. (Middle value of NRV (SP-DC), RC, and NRV-GM = MP). Then compare it to cost. LCM is the lower of the market price vs the cost.

Question 8

As dollar value LIFO layers are added, increases at the base year costs are restated using the price index in effect at the time each layer was added. TF

Answer 8

True

Question 9

Dollar value LIFO inventory costs are cumulative. TF

Answer 9

True

Question 10

When progress billings are sent (dealing with construction projects) revenue is credited. TF

Answer 10

False. The contra account to CIP named BCIP is credited.

Question 11

COGS Available for Sale =

Answer 11

BI + Net P

Question 12

In a period of rising prices, which inventory method will result in the highest COGS?

Answer 12

LIFO

Question 13

In a period of rising prices, which inventory method will result in the highest NI?

Answer 13

FIFO, due to creating the lowest COGS.

Question 14

The double extension and chain link methods refer to what inventory cost flow method?

Answer 14

Dollar value LIFO

Question 15

What is the formula for # of days supply in average inventory?

Answer 15

Average Inventory at cost / Average sales per day at Cost

Question 16

Goods held on consignment are included in inventory. TF

Answer 16

False.

Question 17

Goods out on consignment are included in inventory. TF

Answer 17

True.

Question 18

FOB Shipping Point means…

Answer 18

The title transfers to the buyer at the shipping point.

Question 19

FOB Destination means…

Answer 19

The title transfers to the buyer when its item arrives

Question 20

Using the % of completion method, calculation of income for a period is the ___ costs incurred to date / the ____ estimated costs.

Answer 20

Total

Question 21

WA of inventory = Total cost of inventory / Total ____ of inventory.

Answer 21

Units

Question 22

2 Steps to answering a cost to retail ending inventory question?

Answer 22

1. determine the cost to retail CogsA ratio

2. multiple retail ending inventory by the ratio