10. Which of the following inventaries carried buy a BarBufacture is similar to
ID: 2594987 • Letter: 1
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10. Which of the following inventaries carried buy a BarBufacture is similar to the merchandise inventory of a retailer'? A) Work-in-process. B) Supplies. C) Raw materials. D) Finished goods. 11. Mortenson Corporation sells its product, a rare metal, in controlled market with a quoted price applicable to all quantities. The total cost of 5,000 pounds of the metal held in inventory is. S200,000. The total selling price is $360,000, and estimated con disposal are $20,000, AI what amount should the inventory of 5,000 pounds the reported in the balance sheet? A) $540,000. B) $180,000. C) S560,000. D) $200,000. 12. Which of the following is not considered cash for financial reporting purposes? A) Money orders, certified checks, and personal checks B) Coin, currency, and available funds O Postdated checks and L. O. U.'s D) Petty cash funds and change funds 13. Stemway Company requires a new manufacturing facility. It found three locations, all of which would provide the needed capacity, the only difference is the price. Location A may be purchased for $500,000. Location B may be acquired with a down payment of $100,000 and annual payments at the end of each of the next twenty years of SS0.000, Location C requires $40,000 pay tments at the beginning of each of the next twenty-five years. Assuming Steway's borrowing costs are 8% per annum, which option is the Asuole least Costly to the company? A) Location B. K - Sok. The tota veg B) Location C. Luk pee. C) Location A and Location B. El prin D) Location A. 14. A markup of 25% on cost is equivalent to what markup on selling price? JA) 25% B) 75% C) 80% D) 20%Explanation / Answer
10. D – Finished goods
Finished goods are the goods which is available for sale, so it is similar in both Manufacturer and Retailer.
11. A – 540,000
Inventory = Selling price – Cost of disposal
= 560,000 – 20,000
= 540,000
12. C
13. Location C
Cost of Location A =500,000
Cost of Location = Amount * PVAF @8% of required year
Cost of Location B = 100,000 + 50,000*9.818
Cost of Location B = 590,900
Cost of location C = 40,000*10.675
Cost of location C = 427,000
Location C is least expensive.
14. D - 20%
Profit = 25% on cost
Let’s assume cost = 100
Profit = 25%*100 = 25
Selling price = 100+25 = 125
Markup on selling price = 25/125 * 100
Markup on selling price = 20%
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