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Question(s) / Instruction(s):

A firm has beginning inventory of 450 units at a cost of $10 each. Production during the period was 500 units at $12 each. If sales were 700 units, what is the cost of goods sold (assume FIFO)?

A. $7,500

B. $8,000

C. $7,900

D. $8,100

 

 

12. MG Lighting had sales of 500 units at $100 per unit last year. The marketing manager projects a 15 percent decrease in unit volume this year because a 10 percent price increase is needed to pass rising costs through to customers. Returned merchandise will represent 3.2 percent of total sales. What is your net dollar sales projection for this year?

A. $26,976

B. $69,344

C. $72,800

D. None of these

 

13. A firm utilizing LIFO inventory accounting would, in calculating gross profits, assume that

A. all sales were from current production.

B. all sales were from beginning inventory.

C. sales were from current production until current production was depleted, and then use sales from beginning inventory.

D. all sales were for cash.

 

14. When the cost of raw materials is increasing, FIFO accounting

A. yields higher ending inventory values than LIFO.

B. produces higher unit sales than using LIFO.

C. yields higher cost of goods sold than LIFO.

D. All of these.

 

 

15. A firm utilizing FIFO inventory accounting would, in calculating gross profits, assume that

A. all sales were from current production.

B. all sales were from beginning inventory.

C. sales were from beginning inventory until it was depleted, and then use sales from current production.

D. all sales were for cash.

 

 

16. In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced

A. is higher.

B. is lower.

C. is the same.

D. can be either higher or lower.

 

17. The pro forma income statement is important to the overall process of constructing pro forma statements because it allows us to determine a value for:

A. change in retained earnings.

B. gross profit.

C. interest expense.

D. prepaid expenses.

 

 

18. A firm has beginning inventory of 400 units at a cost of $12 each. Production during the period was 700 units at $13 each. If sales were 800 units, what is the value of the ending inventory using LIFO?

A. $2,750

B. $3,600

C. $3,300

D. $3,850

 

19. In general, the larger the portion of a firm's sales that are on credit, the

A. lower will be the firm's need to borrow.

B. higher will be the firm's need to borrow.

C. more rapidly credit sales will be paid off.

D. more the firm can buy raw materials on credit.

 

 

20. The need for an increase or decrease in short-term borrowing can be predicted by

A. ratio analysis.

B. trend analysis.

C. a cash budget.

D. an income statement.

 

 

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