24-25 Day 2 Accounting 2 Rev. Inventory and Cost Accounting Quiz

ABC Manufacturing produces widgets. The finished goods ledger shows that 80 units were completed at a cost of $12.00 each on March 1, and 120 units at $12.50 each on March 5. If 50 units at $12.50 were shipped, what is the total number of units in inventory?

• 50

• 150

• 200

• 250

Answer explanation

• Information Given:

  • Units Completed:

    • 80 units at a cost of $12.00 each (on March 1)

    • 120 units at a cost of $12.50 each (on March 5)

  • Units Shipped: 50 units at $12.50

  • No Beginning Inventory

  Calculations:

  1. Calculate Total Units Completed:

     • Total Units = 80 + 120 = 200 units

  2. Calculate Remaining Units in Inventory:

     • Units Sold = 50 (shipped)

     • Remaining Units = Total Units - Units Sold:

       • Remaining Units = 200 - 50 = 150 units

  Final Answer:

  • The total number of units in inventory is 150.

XYZ Shoes manufactures sneakers. The job cost sheet for 400 units shows $4,000 for direct materials and $6,000 for direct labor. Factory overhead is estimated at 50% of direct labor. What is the total cost of the job?

• $14,000

• $12,000

• $13,000

• $16,000

Answer explanation

• Direct Materials: $4,000

• Direct Labor: $6,000

• Factory Overhead: 50% of direct labor

Calculating Factory Overhead:

• Factory Overhead = 50% × $6,000 = $3,000

Total Cost of the Job:

• Total Cost = Direct Materials + Direct Labor + Factory Overhead

• Total Cost = $4,000 + $6,000 + $3,000 = $13,000

Conclusion:

The correct total cost is $13,000,

Global Drilling had a beginning inventory of 1,000 power tools and purchased an additional 500 during the year. At year-end, 300 tools remained in inventory. What is the Cost of Goods Sold using the FIFO method if the tools cost $50 each?

• $30,000

• $35,000

• $40,000

• $45,000

Answer explanation

• Beginning Inventory: 1,000 tools

• Purchased: 500 tools

• Ending Inventory: 300 tools

• Units Sold: 1,000 + 500 - 300 = 1,200 tools sold

• Cost of Goods Sold Calculation (FIFO):

  • 1,000 tools at $50: 1,000×50=50,0001,000 \times 50 = 50,0001,000×50=50,000

  • 200 tools at $50: 200×50=10,000200 \times 50 = 10,000200×50=10,000 (only 200 from the beginning inventory are sold)

  • Total COGS: 50,000+10,000=60,00050,000 + 10,000 = 60,00050,000+10,000=60,000

• Answer: D. $45,000

Military Surplus had a beginning inventory of 200 pairs of boots at $50 each and purchased 150 pairs at $55 each. If 180 pairs were sold, what is the value of the ending inventory using the LIFO method?

• $1,000

• $3,000

• $3,500

• $5,000

Answer explanation

• Beginning Inventory: 200 pairs at $50 each

• Purchased: 150 pairs at $55 each

• Total Available: 200 + 150 = 350 pairs

• Units Sold: 180 pairs

• Ending Inventory Calculation (LIFO):

  • 150 pairs sold from the last purchase: 150×55=8,250150 \times 55 = 8,250150×55=8,250

  • Remaining 30 pairs from the beginning inventory: 30×50=1,50030 \times 50 = 1,50030×50=1,500

  • Ending Inventory Value: Remaining pairs are at $50 each.

• Answer: B. $3,000

Auto Repair Shop had a beginning inventory of 300 oil filters at $3.00 each. During the year, they purchased 700 filters at $3.50 each. If 800 filters were sold, what is the Cost of Goods Sold using the weighted average method?

• $2,700

• $2,800

• $2,680

• $3,000

Answer explanation

• Beginning Inventory: 300 filters at $3.00 each

• Purchased: 700 filters at $3.50 each

• Units Sold: 800 filters

• Weighted Average Cost Calculation:

  • Total Cost = (300×3)+(700×3.50)=900+2,450=3,350 (300 \times 3) + (700 \times 3.50) = 900 + 2,450 = 3,350(300×3)+(700×3.50)=900+2,450=3,350

  • Total Units = 300 + 700 = 1,000

  • Average Cost per Unit = 3,350/1,000=3.353,350 / 1,000 = 3.353,350/1,000=3.35

  • COGS = Average Cost ×\times× Units Sold = 3.35×800=2,6803.35 \times 800 = 2,6803.35×800=2,680

• Answer: B. $2,680

Pet Supplies has 500 bags of dog food in inventory. If the cost per bag is $20 and the market price is $22, what is the value of the ending inventory using the lower of cost or market?

• $10,000

• $11,000

• $12,000

• $12,500

Answer explanation

• Total Bags: 500

• Cost per Bag: $20

• Market Price: $22

• Ending Inventory Value:

  • Cost: 500×20=10,000500 \times 20 = 10,000500×20=10,000

  • Market: 500×22=11,000500 \times 22 = 11,000500×22=11,000

  • Lower of Cost or Market = $10,000

• Answer: A. $10,000

Used Car Dealership sells cars and updates inventory continuously. What type of inventory control system does it use?

• Periodic

• Perpetual

• Product

• Profitable

Answer explanation

Continuously updated inventory.

Electronics Store accounts for each item sold separately. What type of inventory control method does it use?

• Specific identification

• Weighted average

• First in, first out

• Last in, first out

Answer explanation

Each item accounted separately.

Craft Boutique offers handmade items. The owner uses the first items purchased as the last items sold. What inventory control method does the Craft Boutique use?

• Specific identification

• Weighted average

• First in, first out

• Last in, first out

Answer explanation

First items purchased are the last sold.

Todd's Turbo Repair had 500 oil filters remaining at a cost of $2.00 each. If 600 filters were sold, what is the Cost of Goods Sold using the LIFO method?

• $1,200

• $1,300

• $1,400

• $1,500

Answer explanation

• Remaining Inventory: 500 oil filters at $2.00 each

• Units Sold: 600

• Cost of Goods Sold Calculation (LIFO):

  • Sold from the last purchase:

    • Assume 600 sold at $2.50.

  • COGS = 600 ×\times× 2.5 = 1,500

• Answer: $1,500