Which of the following statements about the margin of safety is (are ) correct?a. producing units for inventory increases the margin of safetyb. the higher the margin.of safety, the betterO c. very high margins of safety create the need for more inventoryd. all of these

Margin of safety is difference between actual sales and break even sales. Sales of more units…

Which of the following statements about the margin of safety is (are) correct? a. producing units for inventory increases the margin of safety O 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 these

Which of the following statements about the margin of safety is (are) correct? a. producing units for inventory increases the margin of safety O 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 these

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter6: Merchandising Transactions

Section: Chapter Questions

Problem 6MC: Which of the following is an advantage of the periodic inventory system? A. frequent physical...

See similar textbooks

Related questions

Q: State whether the following statements are true with reasons: Safety stock increases as demand…

A: Business needs various type of material in its stock. For every order, some costs needs to be…

Q: Based on the following data, make a comparison between the use of the flow of inventory costs…

A: FIFO: Under this method, the inventory that is bought first is to be sold first. Thus the ending…

Q: When inventory unit costs are increasing: Group of answer choices a)FIFO will result in higher…

A: FIFO refers to the method of inventory costing where items purchased first are sold first.

Q: Which one of the following is a reason for the just-in-time inventory policy? Select one: O A. The…

A: Just in time inventory policy is a policy of inventory management the main purpose of which is to…

Q: 2 Calculate ending inventory using the lower of cost and net realizable value.

A: The Inventory is recorded at cost or NRV in the financial position so that inventory is valued…

Q: Why is the level of and movement in the operating expense percentage an important indicator of…

A: Operating expenses are the expenses required for the operation of the business.

Q: Please answer in detail and tell me why other options are incorrect........ The most useful…

A: Following methods are used to find the valuation of the ending inventory 1) FIFO - First in first…

Q: Which of the following is an advantage of the periodic inventory system?A. frequent physical…

A: When a physical inventory count is performed, a periodic inventory system just updates the ending…

Q: If the beginning finished goods inventory (in units) is more than the desired finished goods ending…

A: Total production required is calculated as sum of forecasted unit sales and planned finished goods…

Q: In times of decreasing prices, LIFO will result in ____ costs of goods sold and _____ ending…

A: FIFO: FIFO stands for First-In, First-Out. In this method inventory purchased first will be sell…

Q: How does Just-In-Time (JIT) system help minimize the inventory investment? Explain.

A: Just-In-Time (JIT) is used for that inventory which is owned by business at reduced amount on…

Q: Which of the following statements represents Margin of Safety (units)? O a. Expected sales (units)…

A: Solution: The margin of safety represent sales level that generates profits. Therefore margin of…

Q: Which of the following might be attributed to efficient inventory management? Select the correct…

A: All of the choices given

Q: Under EOQ approaches, order costs can be minimised by placing large, infrequent orders for…

A: GIVEN Under EOQ approaches, order costs can be minimised by placing large, infrequent orders for…

Q: An advantage of the weighted average inventory method is that it smooths out erratic changes in…

A: Inventory accounting is the branch of accounting concerned with the valuation and accounting for…

Q: . What are some costs associated with high inventories? 3. What is a “supply chain,” and how are…

A: Inventory is defined as the goods and materials which the business holds for the purpose of resale.…

Q: Identify the following as applying more to lean (L) or to traditional (T) businesses. Inventory…

Q: In one modification of the Pigskin problem, the maxi-mum storage constraint and the holding cost are…

A: Given: To explain the change of the optimal production schedule and cost is given as,

Q: The cost method that will yield an ending inventory value that is somewhere between possible high…

A: Inventory valuation has 4 Methods - 1. FIFO 2. LIFO 3. Weighted Average 4. Specific Identification…

Q: “Managers should always buy inventory in quantities that result in the lowest purchase cost per…

A: Inventory: Inventory refers to the raw materials, work-in process, and the finished goods products…

Q: Which one of the following groups of items best identifies various types of inventory opportunity…

A: Inventory Opportunity cost includes the costs to order and hold inventory, additionally on…

Q: Which of the following is an advantage of the periodic inventory system? frequent physical inventory…

A: Periodic inventory system is a system in which cost of goods sold is determined at year end. Value…

Q: 1. Inventory management is the formulation and administration of plans and policies to efficiently…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Keeping track of inventory and keeping carrying costs down. How do you think those issues would…

A: If business organized their inventory management system, the warehousing cost tends to be reduced…

Q: What does a very high inventory turnover ratio signify? Please provide your own example to explain…

A: Inventory turnover ratio is one of the efficiency ratio, which says and calculates how many times…

Q: (b) Will the results in (a) be higher or lower than the results under FIFO and LIFO? Ending…

A: Ending inventory is 100 units at the end of June. So the cost of ending inventory as per following…

Q: 2- Which of the following is a product cost as it relates to inventory? a. Selling costs. b.…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: Which statements below are true? 1. LCM and LCNRV may be applied by individual products, by…

Q: In a period of rising prices,a. cost of goods sold under LIFO will be less than under FIFO.b. gross…

Q: Which of the following is the advantage of using weighted average inventory valuation? When prices…

A: Under FIFO, beginning purchases constitutes the cost of goods sold and ending purchases are the…

Q: Ward Hardware does not expect costs to change dramatically and wants to use an inventory costing…

A: Perpetual Inventory System is an accounting system of valuing the inventory where there is a need…

Q: 11. Which of the following statements about lot-sizing rules for MRP is true? a) The periodic order…

A: Since you have asked multiple questions, we will answer the first question for you. Kindly repost…

Q: Are you correct that, by using LIFO, Kroger reports lower inventory and lowerprofits? Why would…

A: Perpetual and periodic inventory system: In merchandise business, there are two types of inventory…

Q: 1. Which of the following assumptions is false in a cost-volume-profit analysis? Total sales and…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which one of the following inventory management approaches determines the finished goods inventory…

A: Introduction: To run the day-to-day business, the inventory management system is essential or as it…

Q: Select one: A. Economic Order Quantity (EOQ) B. Safety stock C. Order point D. None of the a

A: Ordering cost is cost incurred when an order is created and processed. Carrying cost is the cost of…

Q: a. Why is a high inventory turnover considered to be a positive indicator?b. Is it possible to have…

A: a.Inventory turnover shows the company’s ability to sell its inventory, it is shown in terms of…

Q: Typically, the impact of the LIFO reserve is to decrease cost of goods sold and decrease ending…

A: LIFO method last in first out so LIFO method take last cost of product into account so do not older…

Q: Which cost flow assumption generally results in the highest reported amount of net income in periods…

A: Solution: Under FIFO method, inventory is valued at latest purchase cost. Therefore in period of…

Q: Which one of the following is a reason for the just- in-time inventory policy? Select one: A. The…

A: Just in time inventory policy means purchasing the inventory when ever required and not maintaining…

Q: A firm that uses LIFO accounting for inventory in times of rising investory costs will always report…

A: FIFO First in first out method is a method of inventory accounting wherein the units of goods…

Q: 2. Shepherd Cycles does not expect prices to change dramatically and wants to use a method that…

A: An inventory valuation allows a business to assign a monetary value to items in its inventory.…

Q: Gross profit will be the: A. highest if LIFO is used and inventory costs are decreasing. B.…

A: Inventory valuation can be done based on following methods: a) FIFO: FIFO (First-in, First-Out) is a…

Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

Which 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 these

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

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

Explain why, in the traditional view of inventory, carrying costs increase as ordering costs decrease.
Which of the following is an advantage of the periodic inventory system? A. frequent physical inventory counts B. cost prohibitive C. time consuming D. real-time information for managers
A JIT inventory management system maintains which of the following? a. Goods should be pushed through the system on a fixed schedule based on anticipated demand. b. Goods should be pulled through the system by present demand. c. Total inventory costs are minimized by balancing setup and carrying costs. d. Inventories are needed to avoid stock-out costs.
Which of the following is a disadvantage of the perpetual inventory system? A. Inventory information is in real-time. B. Inventory is automatically updated. C. It allows managers to make current decisions about purchases, stock, and sales. D. It is cost-prohibitive.
Which of the following describes the economic order quantity (EOQ)? a. It is associated with a pull inventory system. b. It is the heart of a JIT purchasing system. c. It minimizes total ordering and carrying costs. d. It minimizes stock-out costs.
Write out the formula for the total costs of carrying and ordering inventory, and then use the formula to derive the EOQ model.
If costs are rising, which of the following will be true?a. The cost of goods sold will be greater if LIFO is usedrather than weighted average.b. The cost of ending inventory will be greater if FIFO isused rather than LIFO.c. The gross profit will be greater if FIFO is used ratherthan LIFO.d. All of the above are true
Which of the following statements regarding the lower of cost and net realizable value (LCNRV) rule is true? a.The LCNRV rule is an application of the cost principle. b.When the net realizable value of inventory drops below the cost of inventory, an adjustment is made to decrease inventory to its net realizable value and decrease income. c.If a company uses the LCNRV rule, there is no need to use a cost flow assumption such as FIFO, or weighted average cost. d.When the net realizable value of inventory is above the cost of inventory, an adjustment is made to increase inventory to its net realizable value and increase income.
For each item below, indicate whether FIFO or LIFO will generally result in a higher reported amount when inventory costs are rising versus falling. The first answer is provided as an example.
Please answer in detail and tell me why other options are incorrect........ The most useful inventory costing method which enables purchase price variance analysis is: A average costing,B standard costing.C last in, first out (LIFO) costing.D first in, first out (FIFO) costing
When inventory unit costs are increasing: Group of answer choices a)FIFO will result in higher ending inventory than will LIFO b)LIFO will result in higher ending inventory than will FIFO c)FIFO will result in higher cost of goods sold than will LIFO d)FIFO will result in higher net income and lower ending inventory than LIFO
In times of decreasing prices, LIFO will result in ____ costs of goods sold and _____ ending inventory than FIFO. Group of answer choices: Lower, Lower Lower, Higher Higher, Lower Higher, Higher