Quizizz 5.2.3/5.2.4 How to Calculate Inventory Cost ACNT1

If a business purchases inventory before it is ready for sale, such as component parts, _____ costs may be incurred.

• processing

• distribution

• holding

• shrinkage

If items are lost or stolen in inventory, _____ costs may be incurred.

• processing

• shrinkage

• distribution

• holding

Freight trucking, rail or air transport, and light-vehicle deliveries contribute to _____ costs.

• processing

• shrinkage

• distribution

• holding

The cost of goods sold is based on the most recent purchases under which method of calculating inventory cost?

• gross profit method

• first in, first out (FIFO)

• weighted average method

• last in, first out (LIFO)

Which method of calculating inventory cost allows a business to store inventory without indicating which batch it belongs to?

• weighted average method

• last in, first out (LIFO)

• last in, first out (LIFO)

• gross profit method

Which method of calculating inventory cost is used to estimate the amount of ending inventory?

• last-in, first-out (LIFO)

• gross profit method

• first-in, first-out (FIFO)

• weighted average method

A business purchases two units at $50 each, and later purchases three more at $60 each. Shortly afterwards, one is sold. What is the cost of the inventory remaining under the LIFO method?

• $224

• $230

• $220

• $234

A business had an inventory cost of $40,000 the last time it was counted. Since then, it made $80,000 in purchases and sales of $110,000. Its gross profit was 25%. What is its estimated inventory at cost using the gross profit method?

• $42,500

• $35,000

• $40,000

• $37,500

Which of the following is an advantage of the first in, first out (FIFO) method?

• It reduces the risk of spoilage.

• It results in lower tax liability.

• Record keeping is simple under this method.

• This method involves no complex calculations.

Which of the following is an advantage of the weighted average method?

• It makes large inventories with many small items easier to count repeatedly.

• It does not require original cost to determine the price of an item.

• It allows the costs of expensive units to be recovered if costs vary widely.

• It can replace the need for physical inventory counting altogether.