Financial Reporting And Analysis MCQ - Financial Reporting And Analysis Section 2

76 Kevin Corporation Limited prepares its financial statements in accordance with IFRS. The inventory related costs incurred during the year include the following:

Raw materials	$56,000
Direct labor	$40,000
Storage of finished goods	$18,000
Abnormal costs	$6,000
Transportation of raw materials	$10,000

The total inventory cost recorded is closest to:

Inventory cost = Raw materials + Direct Labor + Transportation Inventory cost = 56,000 + 40,000 + 10,000 = 106,000. Abnormal cost and storage cost of finished goods are excluded from the cost of inventory.

77 The information on a company’s inventory is given below:

Opening inventory	0 units
1st purchase	500 units at $30/unit
2nd purchase	1,000 units at $33/unit
3rd purchase	1,200 units at $34/unit
Total Sales	2,000 units at $50/unit

Using a periodic inventory system and the weighted average method, the ending inventory value is closest to:

Ending Inventory Weighted Average Calculations

	Units	$/unit	Total $
Purchase #1	500	$30	$15,000
Purchase #2	1000	$33	$33,000
Purchase #3	1200	$34	$40,800
Total available	2,700		$88,800

Average cost = 88,800 / 2,700 = $32.89 Ending inventory
= 2,700 – 2,000 = 700 units.Cost of ending inventory = $32.89 * 700 = $23,023

78 Jackson Enterprises uses the FIFO inventory valuation method. The company bought 400 generators at a price of $300 each on January 5, 2012. 300 of these generators were sold off at a price of $450 each by the end of March, 2012. On April 10, 2012, 250 more generators were bought at a price of $325 each. By May 31, 2012, 225 generators were further sold off at a price of $500 each. What would be the inventory value on June 1, 2012 for the company?

79 Swan Brothers Limited uses weighted average cost as the inventory valuation method. The following table shows their purchases and sales for the first two quarters of cotton bales.

Date	Purchased	Sold	Cost perbale	Price perbale
January 1	180	0	200	250
February 1	20	150	210	250
March 1	0	25	225	275
April 1	200	0	225	275
May 1	100	0	250	280
June 1	0	175	275	300

What is the cost of ending inventory?

Weighted average cost per unit = Total cost incurred ÷ Toatal units purchased. Weighted average cost per unit = [(180 * 200) + (20 * 210) + (200 * 225) + (100 * 250)] ÷ 500 = 110,200/500 = $220.4 Ending inventory = Number of units remaining * weighted average cost Ending inventory = [(180 + 20 + 200 + 100) - (150 + 25 + 175)] * 220.4 = $33,060.

80 Calvin Clients Limited reports its inventory and cost of goods sold using the LIFO valuation method. The following table shows the details of purchases and sales for the year 2010. Assume that in each month, the purchases happen at the start of the month and sales happen at the end of the month.

Month	Units purchased	Units sold	Cost per unit	Price per unit
January	50	0	100	150
March	100	25	110	150
May	0	60	n/a	175
June	125	0	125	175
July	120	0	150	180
October	0	80	n/a	200
December	0	60	n/a	225

What is the cost of goods sold for the company?