# Accounting 350: Quiz

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Accounting 350: Quiz
Accounting 350 Name
Quiz #5, Winter 2010, Chpts 9 & 10

1.
Oslo Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. A profit margin of 30% on selling price is considered normal for each product. Specific data with respect to each product follows:

Product #1
Product #2
Historical cost
\$40.00
\$ 70.00

Replacement cost
45.00
54.00

Estimated cost to dispose
10.00
26.00

Estimated selling price
80.00
130.00

In pricing its ending inventory using the lower-of-cost-or-market, what unit values should Oslo use for products #1 and #2, respectively?

A)
\$40.00 and \$65.00.

B)
\$46.00 and \$65.00.

C)
\$46.00 and \$60.00.

D)
\$45.00 and \$54.00.

2.
Muckenthaler Company sells product 2005WSC for \$20 per unit. The cost of one unit of 2005WSC is \$18, and the replacement cost is \$17. The estimated cost to dispose of a unit is \$4, and the normal profit is 40%. At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-market?

A)
\$8.

B)
\$16.

C)
\$17.

D)
\$18.

3.
The following information is available for October for Barton Company.

Beginning inventory
\$ 50,000
Net purchases
150,000
Net sales
300,000
Percentage markup on cost 66.67%

A fire destroyed Barton's October 31 inventory, leaving undamaged inventory with a cost of \$3,000. Using the gross profit method, the estimated ending inventory destroyed by fire is

A)
\$17,000.

B)
\$77,000.

C)
\$80,000.

D)
\$100,000.

4.
Reyes Company had a gross profit of \$360,000, total purchases of \$420,000, and an ending inventory of \$240,000 in its first year of operations as a retailer. Reyes's sales in its first year must have been

A)
\$540,000.

B)
\$660,000.

C)
\$180,000.

D)
\$600,000.

Use the following to answer questions 5-6:
Plank Co. uses the retail inventory method. The following information is available for the current year.

Cost Retail
Beginning inventory
\$ 78,000
\$122,000
Purchases
295,000
415,000 Freight-in
5,000
— Employee

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