Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 2, Problem 4P
In P2-3, assume that the company desires a safety stock of 500 gallons.
Required:
- 1. Compute the average number of gallons in inventory.
- 2. Compute the total carrying cost.
- 3. Compute the total order cost. Did it differ from your answer in P2-3? Why?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
1. If the business purchases goods for resale purposes, such purchases are charged to?a. Expenses accountb. Sales accountc. Purchases accountd. None of the above
2. Costing information can be used for?a. Budget control and evaluationb. Determining standard costs and variancesc. Pricing and inventory valuation decisionsd. All of the above
Required:
15. If the FIFO cost flow method is used, the sale return shall be costed back into inventory at what unit cost?16. If the average cost flow method is used, the sale return shall be costed back into inventory at what unit cost?
The problem is stated in the picture.
Here is the question:
1. Assume instead, the Company uses the FIFO method in the measurement of its inventories, how much would be its cost of goods sold for the year?
Chapter 2 Solutions
Principles of Cost Accounting
Ch. 2 - What are the two major objectives of materials...Ch. 2 - Prob. 2QCh. 2 - What factors should management consider when...Ch. 2 - Prob. 4QCh. 2 - What kind of information and data are needed to...Ch. 2 - How would you define the term economic order...Ch. 2 - What kind of information and data are needed to...Ch. 2 - What factors should be considered when determining...Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Proper authorization is required before orders for...Ch. 2 - Prob. 13QCh. 2 - Prob. 14QCh. 2 - Prob. 15QCh. 2 - Prob. 16QCh. 2 - Prob. 17QCh. 2 - Normally, a manufacturer maintains an accounting...Ch. 2 - Prob. 19QCh. 2 - Why do companies adopt the LIFO method of...Ch. 2 - Prob. 21QCh. 2 - Prob. 22QCh. 2 - Prob. 23QCh. 2 - Prob. 24QCh. 2 - Prob. 25QCh. 2 - Prob. 26QCh. 2 - Prob. 27QCh. 2 - Prob. 28QCh. 2 - A manufacturing process may produce a considerable...Ch. 2 - After a product is inspected, some units may be...Ch. 2 - Order Point Pershing, Inc. expects daily usage of...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Journalizing materials requisitions Penrose...Ch. 2 - Recording materials transactions Prepare a journal...Ch. 2 - PurrChems raw materials records contained the...Ch. 2 - Using first-in, first-out perpetual inventory...Ch. 2 - LIFO costing Using last-in, first-out perpetual...Ch. 2 - Using the weighted average method of perpetual...Ch. 2 - Prob. 10ECh. 2 - Renfro, Inc. was franchised on January 1, 2016. At...Ch. 2 - Recording materials transactions Craig Products...Ch. 2 - Recording materials transactions Broadwell...Ch. 2 - JIT and cost control Matsui Industries produces...Ch. 2 - Kenkel, Ltd. uses backflush costing to account for...Ch. 2 - For E2-15, prepare any journal entries that would...Ch. 2 - Davis Co. uses backflush costing to account for...Ch. 2 - For E2-17, prepare any journal entries that would...Ch. 2 - A machine shop manufactures a stainless steel part...Ch. 2 - Spoiled work Roger Company manufactures tennis...Ch. 2 - Defective work Herbert Electronics manufactures an...Ch. 2 - Perry Co. predicts it will use 25,000 units of...Ch. 2 - Prob. 2PCh. 2 - Economic order quantity; tabular computation Lopez...Ch. 2 - In P2-3, assume that the company desires a safety...Ch. 2 - Inventory costing methods The purchases and issues...Ch. 2 - Inventory costing methods The following...Ch. 2 - Terrills Transmissions uses a job order cost...Ch. 2 - Prob. 8PCh. 2 - Tuscany Products, Inc. uses a job order cost...Ch. 2 - Prob. 10PCh. 2 - JIT and cost control Langray, Ltd. produces 50,000...Ch. 2 - Backflush costing Russell Corp. uses backflush...Ch. 2 - Webster Company uses backflush costing to account...Ch. 2 - An examination of Buckhorn Fabricators records...Ch. 2 - One of the tennis rackets that Ace Sporting Goods...Ch. 2 - Lloyd Industries manufactures electrical equipment...Ch. 2 - Review Problem for Chapters 1 and 2 UltraLift...Ch. 2 - Financial and Nonfinancial Aspects of Changing to...Ch. 2 - Prob. 2MC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- If the beginning finished goods inventory (in units) and the desired finished goods ending inventory (in units) are the same, the required production in units will be: Select one: O a. Equal to unit sales plus beginning finished good inventory (in units) O b. Equal to unit sales plus beginning finished good inventory (in units) plus ending finished goods inventory (in units) O c Equal to unit sales O d. All of the given answers are correctarrow_forwardThe following information is taken from a company’s records. Applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory? Cost per Unit Market Value per Unit Inventory item 1 (10 units) $ 36 $ 35 Inventory item 2 (25 units) $ 20 $ 20 Inventory item 3 (12 units) $ 6 $ 8 Pick the lower of the two and multiple by the number of units.arrow_forwardCar Armour sells car wash cleaners. Car Armour uses a perpetual inventory system and made purchases and sales of a particular product in 2020 as follows: Jan. 1 Beginning inventory Jan. 10 Sold Mar. 7 Purchased Mar. 15 Sold July 28 Purchased Oct. 3 Purchased Oct. 5 Sold 110 units @ $ 7.30 80 units @ $15.80 330 units @ $ 6.60 130 units @ $15.80 580 units @ $ 6.40 530 units @ $6.30 710 units @ $15.80 Total goods available for sale Units = = = Cost = Required: 1. Calculate the total goods available for sale (in units and cost). = $ 803.00 1,264.00 2,178.00 2,054.00 3,712.00 3,339.00 11,218.00arrow_forward
- Compute the amount of ending inventory The Shirt Shop would report on the balance sheet, assuming the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average. Round intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.arrow_forwardWhich of the following statements about the margin of safety is (are ) correct? a. producing units for inventory increases the margin of safety b. the higher the margin.of safety, the better O c. very high margins of safety create the need for more inventory d. all of thesearrow_forwardNeed help with number question number 3 3. Determine the share of the cost of goods available for sale calculated in Part 1 that should be assigned to ending inventory and to goods sold under: (Do not round the intermediate calculations and round the final answers to nearest whole dollar.) Please explain in detail how you got the numbers for the calculations. For example in detail why and how 130 units - 60 units = 70 units and etc etc. Please and thank you, A table is confusing but if you do make a table just explain step by step. Thanks a lot.arrow_forward
- Ma4. Question 42. The cost of inventory that has been sold to customers is called: A. cost of goods sold, and it appears on the income statement. B.inventory, a current asset that appears on the balance sheet. C.inventory, a current asset that appears on the income statement. D.cost of goods sold, and it appears on the balance sheet. Question 43. ABC Company sold $120,000 of goods and accepted the customer's $120,000 10%, 1- year note in exchange. Assuming 10% approximates the market rate of return, how much interest would be recorded for the year ending December 31 if the sale was made on June 30? A.12,000 B. 3,000 C.0 D. 6,000 Question 44 Under the allowance method of recognizing uncollectible accounts, the entry to write off an uncollectible account A.increases the allowance for uncollectible accounts. B.has no effect on the allowance for uncollectible accounts. C.decreases net income. D. has no effect on net income.arrow_forwardIf the beginning finished goods inventory (in units) is more than the desired finished goods ending inventory (in units), the required production in units will be: Select one: a. Equal to unit sales plus beginning finished good inventory (in units) b. More than unit sales c. Less than unit sales d. Equal to unit salesarrow_forwardThe economic order quantity is not affected by the a. cost of purchase-order forms. b. safety stock level c. cost of insuring a unit of inventory for a year. d. estimate of the annual material consumption.arrow_forward
- 1. Calculate the number and cost of goods available to sell 2. Calculate the number of units in ending inventory 3. Calculate the cost of ending inventory and cost of goods sold use the FIFO,LIFO, Weighted cost average methods. Thank you In advance!arrow_forwardMercado Company's inventory transactions in the fiscal year ended December 31, 2002, follow: Beginning Inventory Jan. 10 Purchase Jan. 1 Feb. 13 Purchase Jul. 21 Purchase 775 units @ $52/unit Feb. 15 Sales @ 600 units @ $53/unit 225 units @ $54/unit Aug. 10 Sales @ 285 units @ $55/unit Aug. 5 Purchase Mercado Company uses a perpetual inventory system. Its inventory had a selling price of $115 per unit, and it entered into the following current-year sales transactions: 450 units @ $56/unit 515 units $115/unit 275 units $115/unitarrow_forward! Required information [The following information applies to the questions displayed below.] O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 27 $15 $5 $ 2 $ 540,000 $ 190,000 During its first year of operations, O'Brien produced 94,000 units and sold 78,000 units. During its second year of operations, it produced 80,000 units and sold 91,000 units. In its third year, O'Brien produced 82,000 units and sold 77,000 units. The selling price of the company's product is $75 per unit. 2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Inventory management; Author: The Finance Storyteller;https://www.youtube.com/watch?v=DZhHSR4_9B4;License: Standard Youtube License