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MBA 5100 Ch 5,6,7 Questions and answers latest update
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MBA 5100 Ch 5,6,7When goods are sold under the perpetual inventory system, the cost of good sold is transferred from the
_____ account to the _____ account - correct answer Inventory cost of goods sold
The specific identification cost flow method is most likely to be used when - correct answer sales volume
is low and cost per unit of inventory is high
Ted's sports Center purchased two basketballs for resale. One was purchased in June at a cost of $30 and
the other was purchased in July at a cost of $34. The two inventory items are identical in all respects
except the price paid to acquire them. Assume Ted's uses the FIFO cost flow method. If Ted's sells one of
the balls in August, the amount charged to cost of goods sold - correct answer Will be $30
When inventory is sold, inventory cost methods (FIFO, LIFO, weighted average) are used to determine
how much cost to assign to - correct answer cost of goods sold
Which method do companies most often use to physically flow inventory items through a store? - correct
answer FIFO
Inventory item 101 cost $100. Inventory item 102 cost $110. If the business uses the specific
identification cost flow method and Item 102 is sold to a customer, the amount assigned to cost of goods
sold is ______. - correct answer $110
Fred's Fans purchased two identical fans for resale. Fan 1 was purchased in April and cost $76. Fan 2 was
purchased in May and cost $80. One of the fans was sold in June for $100. Which inventory cost flow
method would result in a $20 gross margin? - correct answer Last-in, first out
Fred's Fans purchased two identical fans for resale. Fan 1 was purchased in April and cost $76. Fan 2 was
purchased in May and cost $80. One of the fans was sold in June for $100. Which inventory cost flow
method would result in a $22 gross margin? - correct answer Weighted average
Inventory item 101 purchased in October cost $100. Inventory item 102 purchased in November cost
$110. The two inventory items are identical in all respects, except the price paid to acquire them. The
, business uses the Last-in, first-out (LIFO) cost flow method. If item 101 is sold to a customer, the amount
assigned to cost of goods sold is ______. - correct answer $100
Reason:
Regardless of which item is sold, LIFO requires the cost of the last item to be charged to cost of goods
sold.
Benson Company purchased two identical inventory items. The item purchased first cost $40. The
second item cost $42. If one of the items were sold, which cost flow method would produce the highest
amount of cost of goods sold? - correct answer last in first out
cost of goods available for sale is the amount of the _____. - correct answer beginning inventory +
purchases made during the accounting period
Benson Company had beginning inventory of 150 units that cost $200 each. During the year, Benson
made two inventory purchases: Purchase 1 for 500 units that cost $210 each and Purchase 2 for 350
units that cost $220 each. During the year, Benson sold 700 units. If Benson uses LIFO, reported ending
inventory equals ______. - correct answer $61,500.
Reason:
Purchase 2 (350 units × $220) + purchase 1 (350 units × $210 each) = $150,500 cost of goods sold;
$212,000 cost of goods available for sale - $150,500 cost of goods sold =$61,500.
Benson Company had beginning inventory of 150 units that cost $200 each. During the year, Benson
made two inventory purchases: Purchase 1 for 500 units that cost $210 each and Purchase 2 for 350
units that cost $220 each. During the year, Benson sold 700 units. If Benson uses LIFO, cost of goods sold
equals ______. - correct answer $150,500
Benson Company had beginning inventory of 150 units that cost $200 each. During the year, Benson
made two inventory purchases: Purchase 1 for 500 units that cost $210 each and Purchase 2 for 350
units that cost $220 each. During the year, Benson sold 700 units. If Benson uses Weighted-average cost
flow method, cost of goods sold equals ______. - correct answer $148,400
Benson Company had beginning inventory of 150 units that cost $200 each. During the year, Benson
made two inventory purchases: Purchase 1 for 500 units that cost $210 each and Purchase 2 for 350
units that cost $220 each. During the year, Benson sold 700 units. If Benson uses The weighted-average
cost flow method, reported ending inventory equals ______. - correct answer $63,600
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