FAR 9 INVENTORY

Question 1

What is the weighted average cost of goods formula?

Answer 1

Beg cost + cost of purchases / beg units + purchased units

take that and multiply by units sold

Question 2

What is the new moving average unit cost?

Answer 2

Cost of the units purchased + cost of unis in inventory / new total number of units

Question 3

How do you find ending inventory using the weighted average cost of goods formula?

Answer 3

get the average cost per unit by

beg cost + cost of purchases / beg units + purchased units

take that and multiply by units remaining at the end of period

Question 4

What Method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?

Answer 4

FIFO

THEY SELL INVENTORY IN THE ORDER IT IS RECEIVED,

Question 5

These costs are examples of what?

Abnormal costs
Idle Factory Expense
Unallocated overhead
excessive spoilage
freight out

Answer 5

Excluded Inventory Costs

Question 6

What inventory method would be used in an inflationary environment where a company wants to retain the most cash?

Answer 6

LIFO

PRODUCES THE LOWEST NET INCOME AND THE LOWEST TAXABLE INCOME- MORE CASH RETAINED

Question 7

__________ Returns are included in the calculation of both cost and retail amounts of goods available for sale.

Answer 7

Purchase returns

Reduce net purchases at both because they represent amounts included in gross purchases that aren’t available.