AC 210 Chapter 7 learnsmart

What is the inventory costing method that adds together the total cost of all goods available for sale during the period, and then divides that by the number of units available for sale to get a value to assign to all goods sold and all goods remaining in inventory?

Weighted average cost

The goals of inventory managers include ______. (Check all that apply.)

making sure that inventory quality meets customer expectations having enough inventory on hand to meet customer demand keeping the costs of buying and storing inventory as low as possible

The costs of carrying inventory include the costs of ______. (Check all that apply.)

spoilage storage obsolescence theft

Widget Company started the month with 10 gadgets in its Inventory that cost $5 each. During the month, Widget bought 50 more gadgets that cost $6 each. At the end of the month, Widget counted its inventory and found that 8 gadgets remained unsold. If Widget uses FIFO, its Cost of Goods Sold for the month is ______.

$302

Inventory is reported on the ______. Later, when the inventory is sold, it becomes ______.

balance sheet as a current asset; Cost of Goods Sold on the income statement

Merchandise inventory ______. (Select all that apply.)

consists of products acquired in a finished condition that are available for sale is reported as a current asset on the balance sheet

When using the specific identification inventory method, cost of goods sold equals the ______.

cost of the actual item sold

Inventory is reported as a(n) ______.

current asset on the balance sheet

LIFO uses the ______ unit costs for Cost of Goods Sold on the income statement and the ______ unit costs for Inventory on the balance sheet.

newest; oldest

Which inventory costing method assumes that the inventory's cost flow out in the same order the goods are received?

FIFO

Which inventory costing method assumes that inventory costs flow out in the opposite order from which the goods were purchased?

LIFO

Which inventory costing method uses the newest cost for Cost of Goods Sold on the income statement and the oldest cost for Inventory on the balance sheet?

LIFO

Which inventory costing methods are based on assumptions that accountants make about the flow of inventory costs? (Check all that apply.)

LIFO FIFO

True or false: Specific identification is an inventory method typically used when accounting for expensive and unique inventory items.

True

FIFO, LIFO, and weighted average inventory costing methods are based on ______.

assumptions that accountants make about the flow of inventory costs

Dumb Waiters, Inc. has 2 units in beginning inventory with a cost of $10 each. It purchased 3 more at $12 each. What is the weighted average cost per unit?

$11.20

The weighted average cost method uses the ______ cost for Cost of Goods Sold on the income statement and the ______ cost for Inventory on the balance sheet.

Average;Average

Beginning Inventory consists of 4 items at $10 each. During the month, the company purchased 3 items for $11 each and it sold 3 items. Using first-in, first-out, Cost of Goods Sold equals ______.

30

Beginning Inventory consists of 4 items at $10 each. During the month, the company purchased 3 items for $11 each and it sold 3 items. Using last-in, first-out, Cost of Goods Sold equals ______.

33