Answered: 24. In which method of purchasing,…

24. In which method of purchasing, price fluctuations are negligible. a.Co-operative purchasing b.Contract purchasing c.Specific future period purchasing d.Speculative purchasing

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 25CE: Effects of Inventory Costing Methods Refer to your answers for Filimonov Inc. in Cornerstone...

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Question

24. In which method of purchasing, price fluctuations are negligible.

a.Co-operative purchasing

b.Contract purchasing

c.Specific future period purchasing

d.Speculative purchasing

25. Which material control technique is called as ‘always better control’?

a.ABC analysis

b.Perpetual inventory system

c.Preparation of inventory budgets

d.Just in time purchase

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Evaluate different types of risk and costs if the financial director proposed to reduce inventory. Current ratio 1.39 and Acid ratio 0.49
22.Which inventory costing method has a stabilizing effect on profit, such that during a period of rising prices its use produces a not so high cost of goods sold and not so low profit as the earlier lower costs tend to stabilize the effect of increasing prices on both cost of goods sold and ending inventory? a. First-in, first-out method b. Last-in, first-out method c. Specific identification method d. Average method
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Effects of Inventory Costing Methods Refer to your answers for Filimonov Inc. in Cornerstone Exercises 6-22 through 6-24. Required: 1. In a period of rising prices, which inventory costing method produces the highest amount for ending inventory? 2. In a period of rising prices, which inventory costing method produces the highest net income? 3. In a period of rising prices, which inventory costing method produces the lowest payment for income taxes? 4. In a period of rising prices, which inventory method generally produces the most realistic amount for cost of goods sold? For inventory? Would your answer change if inventory prices were decreasing during the period?
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