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1.The following information for the month of April is available from the records of Ireland Department Store:

At Cost At Retail $74,600 80,000 $53, 250 2,000 Sales Purchases Freight-in Additional markups Markup cancellations Markdowns

Estimate the cost of the April 30 inventory using the Conventional Retail Inventory Method:

Select one:

a. $9,380

b. $11,183

c. $10,058

d. $9,319

e. $13,668

2.

At a lump-sum cost of $18,000, Obenauer Company recently purchased the following items for resale:

Item ABC QRS XYZ No. of Items Purchased 2,000 1,000 3,000 Resale Price Per Unit $3.00 $6.00 $5.00

The appropriate cost per unit of ABC inventory is:

Select one:

a. $3.00

b. $.80

c. $2.50

d. $3.75

e. $2.00

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Answer #1

1.CALCULATION OF CLOSING INVENTORY FOR APRIL 30

PARTICULARS AT COST AT RETAIL
COST OF INVENTORY[APRIL 1] $8400 $11400
+PURCHASES $53250 $80000
TOTAL $61650 $91400

CALCULATION OF COST TO RETAIL RATIO:

AT COST TOTAL / AT RETAIL TOTAL*100=61650/91400*100

=67.45%

CLOSING INVENTORY=AMOUNT OF INVENTORY LEFT *COST TO RETAIL RATIO

=[91400-74600-200]*67.45%

= 16600*67.45%

=$11197[APPROXIMATELY]

OPTION b=$11183

2.CALCULATION OF COST PER UNIT OF ABC INVENTORY :

TOTAL COST=$18000

TOTAL UNITS=6000 [2000+1000+3000]

TOTAL ABC INVENTORY UNITS=2000

COST OF ABC INVENTORY=2000/6000*18000

=$6000

COST PER UNIT OF ABC INVENTORY =$6000/2000

=$3.00

OPTION A[$3.00]

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