Question 1

A company manufactured 1,000 units of product during the year and sold 900 units.

Costs incurred during the current year are as follows:

Direct materials and direct labor

$9,000

Indirect materials and indirect labor

4,000

Insurance on manufacturing equipment

2,400

Advertising

1,600

Total

17,000

What amount should be reported as inventory in the company’s year-end balance sheet?

A. What is the Cost of Goods Sold for the year?

B. What is the ending inventory at year end?

** Include your calculations

Question 2

Ending balances for Rose Fuel Company selected accounts are presented below:

Sales

$300,000

Beginning inventory

50,000

Ending inventory

60,000

Smith’s gross margin is 20%. What amount represents Smith purchases?

Using the gross profit method calculate Cost of Goods Sold and Purchases for the period.

A. What is the Cost of Goods Sold?

B. What is the Purchases value for the period?

** Include your calculations

Question 3

Fresh Packaging Company had a beginning inventory of 12,000 units and purchased 15,000 units

during the year. Sales for the year totalled 13,000 units at $8 per unit. Based on the information below

calculate cost of goods sold and ending inventory dollar values based on FIFO.

Available

Units

Unit Price

for Sale

Ending Inventory

Beginning Inventory – October

3,000

$3.00

Beginning Inventory – November

3,000

$3.10

Beginning Inventory – December

6,000

$3.20

Purchases – April

4,000

$2.80

Purchases – June

11,000

$3.00

Totals

27,000

$ –

$ –

0

Sales

13,000

$ –

Ending Inventory

14,000

$ –

Calculate Cost of Goods Sold and Ending inventory dollar values

A. Cost of Goods Sold

B. Ending Inventory Dollar Value

NOTE: Create a table for calculations

Question 4

Premier Company uses a periodic inventory system.

The following are inventory transactions for the month of March:

Cost

Units

Per Unit

1-Mar

Beginning inventory

30,000

$ 12.00

21-Mar

Purchase

20,000

$ 14.00

24-Mar

Purchase

40,000

$ 11.00

31-Mar

Sales at $40 per unit

70,000

Premier uses the LIFO method to determine the value of its inventory.

What amount should Premier report as cost of goods sold on its income statement for the month of March?

A. Cost of Goods Sold

B. Dollar value ending inventory

Question 5

In your own words explain moving average inventory costing and average inventory costing methods. (225-300 words)

How are they different? Why might accountants prefer one system over the other?

Explain the benefits of each method and how cost versus benefit might be optimized.

your answer can be presented as a list of bullet points. Write, read, and review your work.

Verify each question or requirement for this question is addressed in your answer.

Your answer should explain how unit costs are calculated for each of the two methods.